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Life in a ‘degrowth’ economy, and why you might actually enjoy it
Time to get off the economic growth train?
We used to live on a planet that was relatively empty of humans; today it is full to overflowing, with more people consuming more resources. We would need one and a half Earths to sustain the existing economy into the future. Every year this ecological overshoot continues, the foundations of our existence, and that of other species, are undermined.
Like a snake eating its own tail, our growth-orientated civilisation suffers from the delusion that there are no environmental limits to growth. But rethinking growth in an age of limits cannot be avoided. The only question is whether it will be by design or disaster.
https://theconversation.com/life-in-a-degrowth-economy-and-why-you-might-actually-enjoy-it-32224?fbclid=IwAR0RjInYsTiL0nLAcLsLVHbUcbPATEAi1Oqyrxa2WUmlZHYHOQk32z2t-Fc
Peak Oil Review: 29 July 2019
By Tom Whipple, originally published by Peak-Oil.org
https://www.resilience.org/stories/2019-07-29/peak-oil-review-29-july-2019/
Quote of the Week
““For all its revolutionary impact on the oil industry, shale remains poorly understood. Publicly available data based on old-fashioned company reporting have their limits. Hard measurements unlocked by new data technologies show that, contrary to public belief, there is no great buildup of DUCs [drilled but uncompleted wells] just waiting to be brought online. The whole idea that the market can rely on this sort of de facto spare production capacity is an illusion. The industry is actually running on a much tighter leash than that.” Antoine Halff, Kayrros chief analyst and cofounder.
Graphic of the Week
Battery storage deployment during the last two years:
1. Oil and the Global Economy
The US oil and gas rig count fell by eight this week, according to Baker Hughes, adding to months of losses, as US oil production falls to its lowest level since October 2018. The total number of active oil rigs in the United States fell by three, according to the report, reaching 776. The number of active gas rigs decreased by 5 to reach 169.
The combined oil and gas rig count is now 946 for the week, with oil seeing an 85-rig decrease year on year and gas rigs down 17 since this time last year. The combined oil and gas rig count is down 102, year on year. Year-to-date, the oil rig count has fallen from 858 active rigs since the beginning of the year to 776, while gas rigs have fallen from 187 to 169 during that same time.
US production fell sharply for the week ending July 19 to 11.3 million b/d, more than 1 million barrels down from the all-time high in the United States, and the lowest production level since October of last year. Canada’s overall rig count saw an increase this week of 9 after increasing by one last week. Canada’s oil rigs are down by 69 year on year, with gas rigs down 27 year on year.
The American Petroleum Institute (API) reported a huge crude oil inventory draw of 10.961 million barrels for the week ending July 18. This is in line with U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) that decreased by 10.8 million barrels from the previous week. After the extra-large draw—the largest draw this year–the net build is now just 1.20 million barrels for the 30-week reporting period so far this year, using API data.
US Shale Oil Production:
Three months ago, when Helmerich had 220 of its rigs hired out, Chief Executive Officer John Lindsay told investors the second quarter would be the nadir for his fleet. But after the number of Helmerich rigs at work shrank to 214 a few weeks ago, Lindsay says his earlier projection was “premature.” “The full effect of the industry’s emphasis on disciplined capital spending continues to reverberate through the oil field services sector,” he said in a Wednesday statement. “We are reluctant to predict another bottom and see further softening during our fourth fiscal quarter as our guidance would indicate.”
The hired hands of the shale patch who drill and frack wells are suffering from a slowdown in North American spending brought on by investor demands for higher returns. The US oil rig count has fallen 11% this year, according to Baker Hughes. Fracking giant Halliburton Co. is eliminating jobs and warehousing equipment no one wants to rent. Superior Energy Services Inc. said earlier this week that it’s looking for ways to cut costs and may sell assets to raise cash. On Thursday, 28 of the 29 oil and gas industry stocks in the S&P 500 Index were falling. The frack market “is a mess,” Brad Handler, an analyst at Jefferies LLC, wrote in a note to clients. “With every passing data point/call, there is little to suggest this market gets any better, and so we hack away at numbers again.”
Helmerich’s smaller rival Patterson-UTI Energy Inc. also cut its forecast. The Houston-based contractor said it expects to run 142 rigs on average during the third quarter, down 10% from the previous three-month period. “E&P companies are being extra vigilant this year in monitoring their spend due to commodity price volatility and the increased focus on spending within their budgets,” Andy Hendricks, chief executive officer at Patterson, said in the statement. Helmerich & Payne fell as much as 7.6% while Patterson dropped as much as 11% for its biggest tumble since February 2018.
Operators in the Permian have been failing to report the completion of some oil wells, according to one data analytics company. Hydraulic fracturing (fracking) activity was underreported by 21 percent in the U.S.’ most prolific basin in 2018, according to Kayrros, a data analytics company serving the energy markets. In findings released Tuesday, Kayrros claims that more than 1,100 wells were completed in the Permian Basin but not reported through state commissions or FracFocus – a public repository for information on chemicals used during fracking. Kayrros said it uses optical and synthetic aperture radar imagery tracking along with proprietary algorithms to identify rigs and frack crews. Using those methods, they counted a total of 6,394 completed wells in the Permian in 2018 – a 21 percent increase from the FracFocus estimate of 5,272 wells as of June 20, 2019.
With financial stress setting in for US shale companies, some are trying to drill their way out of the problem, while others are hoping to boost profitability by cutting costs and implementing spending restraint. Both approaches are riddled with risk. “Turbulence and desperation are roiling the struggling fracking industry,” Kathy Hipple and Tom Sanzillo wrote in a note for the Institute for Energy Economics and Financial Analysis (IEEFA). They point to the example of EQT, the largest natural gas producer in the United States. A corporate struggle over control of the company reached a conclusion recently, with Toby and Derek Rice seizing power. The Rice brothers sold their company, Rice Energy, to EQT in 2017, but they launched a bid to take over EQT last year, arguing that the company’s leadership had failed investors.
US shale producers are poised to further trim spending this year, executives at companies that provide drilling and hydraulic fracturing services warned this week, as several took steps to idle more oilfield equipment. Oilfield suppliers are idling more of the equipment used to fracture wells, and drilling contractors say they expect to run fewer rigs in the second half of the year than in the first. The slowing pace comes as Wall Street pressures oil producers to focus on returns rather than expanding drilling operations.
2. The Middle East & North Africa
Iran: Tehran is ready for “just” negotiations but not if they mean surrender, Iran’s President Hassan Rouhani said on Wednesday, without saying what talks he had in mind. Rouhani seemed to be referring to possible negotiations with the United States. US President Donald Trump withdrew from a landmark 2015 nuclear deal with Iran last year but has said he is willing to hold talks with the Islamic Republic. “As long as I have the responsibility for the executive duties of the country, we are completely ready for just, legal and honest negotiations to solve the problems,” Rouhani said, according to his official website.
The remaining signatories to the Iran nuclear deal met in Vienna on Sunday to try again to find a way of saving the accord amid mounting tensions between Tehran and Washington. Envoys from Britain, France, Germany, China, Russia and Iran took part in the extraordinary meeting which comes a month after a similar gathering failed to achieve a breakthrough. As US oil sanctions tightened in May, Iran said it would disregard certain limits the deal set on its nuclear program and threatened to take further measures if remaining parties to the deal, especially European nations, did not help it circumvent the US sanctions. Pressure has continued to mount in the region with a string of incidents involving mysterious attacks on oil tankers and downing of drones.
The Trump administration’s plan to rally global naval powers to protect shipping lanes in the Persian Gulf is not progressing very well. After the President pulled back from a military strike on Iran last month, Plan B for the US was to convince interested parties to band together and escort oil tankers through the Strait of Hormuz. Nobody wanted anything to do with a new war in the Middle East, but with roughly 20 million b/d passing through the Strait every day – or a fifth of global supply – building a coalition of naval ships from multiple countries would seemingly be a much easier lift. Newly confirmed US Secretary of Defense Mark Esper said his top priority would be “Operation Sentinel,” as it is called, which would include getting other navies to help the US provide security in the Persian Gulf for oil tankers.
3. China
Secretary of the Treasury Mnuchin and Trade Representative Lighthizer will resume trade talks in Shanghai on July 30, with a focus on agriculture, the trade deficit and other issues. Analysts remain skeptical that the two sides can reach a broad deal to end the trade conflict that has slowed US exports of LNG, crude, soybeans and other agricultural products.
ClearView Energy Partners managing director Kevin Book said prospects still look dim for a deal that would address US demands for “substantial and durable Chinese reforms, expanded market access and intellectual property controls.” Book said comments by President Donald Trump since he met with Chinese President Xi Jinping in June suggest “some willingness” to proceed with 25% tariffs on $300 billion worth of Chinese goods.
US crude exports to China dried up in August through November 2018 and again in January even though crude oil has not been officially targeted by retaliatory tariffs. The US exported an average of 62,000 b/d of crude to China in April, according to the most recent US Energy Information Administration data, well below the monthly peak of 510,000 b/d in June 2018.
The US has sanctioned a Chinese state oil trader for violating restrictions on Iranian crude, an attempt to tighten restrictions on the Islamic Republic and cut off one of its biggest buyers.
Zhuhai Zhenrong Co., the secretive company with links to the Chinese military, has a history of taking Iranian crude and fuel, at times as part of barter deals for goods or services, and then selling it on to refiners in China. The US move comes at a delicate time for relations with Beijing as the two nations attempt to kick-start negotiations aimed at resolving their broader trade conflict.
4. Russia
The blame game over a contamination scandal in Russia’s oil industry has breached President Vladimir Putin’s inner circle. Igor Sechin, head of Rosneft, the world’s biggest publicly-traded oil company, and Nikolai Tokarev, the boss of Transneft, the world’s largest pipeline network, are embroiled in an unusually public and rancorous dispute over their companies’ responses to the contamination of Russia’s Druzhba (“Friendship”) pipeline, an episode that disrupted exports and tarnished Moscow’s image as a reliable energy supplier.
Publicly, Putin has remained on the sidelines while the two men wage a war of words by news release leveling allegations of treachery and incompetence. A third government source said he thought Putin was letting the dispute play out because it helped distract from a central and unanswered question: who was to blame for the dirty oil scandal.
Since the contamination was uncovered in April, Rosneft has publicly accused Transneft of fumbling its response and of failing to devise a plan to prevent it happening again, while Transneft has accused Rosneft of getting its facts wrong and of making unsubstantiated compensation claims.
Transneft needs a truce with its largest customer if it is to draw a line under the scandal and agree to compensation deals with it and other oil producers. The row hit a low point earlier this month when Transneft curbed oil intake from Rosneft, cutting Russian production close to a three-year low. The curbs have since been lifted and output levels have been restored, Energy Minister Alexander Novak said last week.
Last week, Reuters cited an official at PKN Orlen, Poland’s biggest refinery, as saying that Russian crude oil has been deteriorating in quality–despite the ongoing cleanup following that April contamination scandal that disrupted supplies and launched a tense backlash among buyers.
At the same time, one of the key suspects in the ongoing Russian investigation into the contamination, Roman Ruzhechko, is seeking political asylum in Lithuania–where PKN Orlen also has a refinery, Reuters reports separately.
Just over a week ago, Lukoil, Russia’s second-largest producer, managed to fully restore supply volumes after contamination on the Druzhba oil pipeline disrupted Russian crude supplies in late April.
The oil was contaminated with organic chlorine, a substance used in oil production to boost output but dangerous in high amounts for refining equipment. The amounts of the chemical were found to be at levels much higher than the maximum allowable amount.
Having launched an investigation into the incident, Russia concluded that the contamination was deliberate, and Ruzhechko is one of the main suspects. In fact, Russia believes this was a criminal conspiracy coordinated in part by the small oil transport company of which Ruzhechko is an executive.
5. The Briefs (date of the article in the Peak Oil News is in parentheses see more here: http://www.news.peak-oil.org)
In China, a wave of new production and slowing domestic demand have forced China to export petrol cargoes to Nigeria and Mexico as the Asian country ramps up petrol exports in July and August to near-record levels. The surge in Chinese exports will fill a supply gap caused by refinery outages in the United States and the Middle East. It is also likely to accelerate a plunge in Asian petrol margins. (7/27)
Nigeria is currently losing $25 billion annually to illegal oil bunkering and insecurity on the nation’s waterways. This was disclosed by the immediate past minister of transportation over the weekend. (7/22).
Venezuela and Chevron: Chevron Corp, the last US oil company operating in Venezuela, said on Thursday it hopes to be able to remain in the Latin American nation as the Trump administration mulls whether to renew its license, expiring on Saturday, to do business there. The administration said a decision will be made soon on the renewal of Chevron’s six-month US Treasury Department license to operate in Venezuela, with billions of dollars in the company’s investments at stake. (7/26)
Curacao’s prime minister and Venezuela’s oil minister discussed the possibility of Venezuelan state oil company PDVSA remaining as the operator of the Caribbean nation’s 335,000 b/d Isla refinery, Curacao’s government said on Monday. PDVSA’s contract will expire at year-end, and the government-owned refinery has been searching for a business partner to replace it. A lack of crude shipments has left the facility largely idle. (7/23)
In Canada, an increasingly tighter supply of heavy crude elsewhere will in all likelihood help Canada’s oil industry weather the unfavorable effects of the so-called IMO 2020 rules, which stipulate a much lower allowable level of sulfur in bunkering fuel. The combined effect of US sanctions against Venezuela and Iran have significantly changed the demand and supply picture for heavy oil, and this is benefiting Canadian producers. (7/24)
The US oil rig count fell by 3 to 776 while the gas rig count declined by 5 to 169, according to GE’s Baker Hughes. The combined oil and gas rig count is now 946 for the week, with oil seeing an 85-rig decrease year on year and gas rigs down 17 since this time last year. Year-to-date, the oil rig count has fallen from 858 active rigs since the beginning of the year to 776, while gas rigs have fallen from 187 to 169 during that same time. (7/27)
Fraudulent fracking data? Hydraulic fracturing (fracking) activity was underreported by 21 percent in the U.S.’ most prolific basin in 2018, according to Kayrros, a data analytics company serving the energy markets. Kayrros claims that more than 1,100 wells were completed in the Permian Basin but not reported through state commissions or FracFocus – a public repository for information on chemicals used during fracking. This implies two things: 1) The belief that shale operators have a large backlog of DUCs that can quickly be brought to production in the event of an oil crisis without further drilling is misleading; and 2) the average well is less productive and of higher cost than is reflected in public data. (7/24)
Shut down Line 5? Democratic presidential hopeful Bernie Sanders has called for the controversial Line 5 oil pipeline to be shut down. Sanders became the second 2020 Democratic primary candidate to seek the closure of the oil pipeline that crosses a channel linking two of the Great Lakes in Michigan. His call for shut down of this 66-year-old pipeline comes right on the 9-year anniversary of Enbridge’s disastrous oil spill in Michigan when 1 million gallons of oil were spilled into the Kalamazoo River. (7/27)
Renewable natural gas—methane collected from waste and manure—is a popular source of energy in Europe, but in the United States, it has yet to establish itself as a viable alternative to fossil fuel gas. Thanks to tax incentives and improving technologies, however, companies are making increasingly wider inroads into this segment of the renewable energy industry. Earlier this month, New York became the latest city to join a growing network of 530 fueling stations featuring renewable natural gas (RNG) that are run by a T. Boone Pickens company, Clean Energy Fuels. (7/27)
Fusion a step forward: A multination project to build a fusion reactor cleared a milestone yesterday and is now 6 ½ years away from “First Plasma,” officials announced. Yesterday, dignitaries attended a components handover ceremony at the construction site of the International Thermonuclear Experimental Reactor in southern France. (7/26)
French nuclear generation fell to 38 GW Wednesday as 4 GW of heat-related restrictions took effect at the Golfech and Saint Alban nuclear plants in southern France, data by grid operator RTE showed. The current heatwave forced nuclear operator EDF to take its 2.6 GW Golfech plant on the Garonne river offline Tuesday afternoon. (7/24)
A historic heat wave inflicted life-threatening temperatures on Europe and shattered all-time highs in multiple countries Thursday. Paris registered a jaw-dropping 108.7 degrees, according to Météo-France, the national weather service, breaking the record of 104.7 degrees set in 1947. Belgium, Germany and the Netherlands all saw new national records Thursday, beating highs set just the day before. (7/26)
Russian coal doldrums: Low European-delivered thermal coal prices and high utility inventories caused May exports of Russian thermal coal to dip for the first time in ten months, according to trading sources. Russian thermal coal exports in May fell 4.3% on the year while the per-ton price dropped 41.7% year-over-year (7/23).
India may be planning its own EV battery gigafactory, LiveMint reports, citing an unnamed government official. According to the report, the facility would cost US$4 billion to build. This is not the first-time media have reported on plans by New Delhi to start building its own battery manufacturing capacity. (7/27)
In China, BMW Brilliance Automotive has become the first automobile manufacturer to enable full 5G wireless coverage at all its plants. The new wireless standard allows large quantities of data to be transferred within a very short space of time, since data will now be processed in small, high-performance computer centers directly on-site and no longer has to travel long distances. (7/22)
Peak Oil Review: 22 July 2019
By Tom Whipple, originally published by Peak-Oil.org
https://www.resilience.org/stories/2019-07-22/peak-oil-review-22-july-2019/
Quote of the Week
“The Governor has long-held concerns about fracking and its impacts on Californians and our environment and knows that ultimately California and our global partners will need to transition away from oil and gas extraction.”-Governor Gavin Newsom’s chief of staff Ann O’Leary, after the Governor, fired the state’s lead oil regulator upon learning that fracking permits had doubled this year over last.
Graphic of the Week
Battery storage deployment during the last two years:
1. Oil and the Global Economy
After six days of steady price drops that took prices down about $5 a barrel, oil rebounded about 1 percent on Friday. The rebound came on news that Iran had seized a British registered tanker while sailing in Omani waters through the Straits of Hormuz. Oil closed out the week at $55.63 in New York and $62.47 in London.
So far, there is no indication that Britain is planning a military response to the seizure of the ship which is owned by a Swedish firm. The escalation of the Straits standoff adds another dimension to the oil price story.
For now, there seem to be three major factors at work that will determine the immediate future of oil prices. Any interruption in tanker traffic through the Straits of Hormoz would obviously send oil prices higher – perhaps even to unprecedented levels if the outage is widespread and prolonged. There are few good alternatives to shipping oil, and in 2018, its daily oil flow averaged 21 million b/d, or the equivalent of about 21 percent of global petroleum liquids consumption. The Saudis and the UAE have pipelines which bypass the Straits, but their capacity is only about 6 million b/d. Marine insurance rates on ships passing through the Straits are reported to be up nearly 10-fold.
The next major factor that will determine oil prices is slowing demand and a glut in the global crude markets. The IEA is reducing its 2019 oil demand growth forecast to 1.1 million b/d from 1.2 million due to a slowing global economy and the US-China trade dispute. With the growth of China’s economy recently registering a 27-year low, settlement of the disagreement may be the only hope for increasing demand.
Finally, we have the growth rate of the US shale oil industry, which has been lagging this year. A few months back we were looking a 1 million b/d + annual increase in production. It is too early to say that the US shale oil production is going into decline. However, it is clear that estimates of rapid growth continuing for decades were too optimistic and could well pause soon. The factors that are leading to a decline in shale oil production will not always obtain. Fighting in the Middle East could well drive oil prices so high that production may become profitable again. Overproduction gluts are always cleared, and business activity always rebounds. US shale oil production declined in 2016-2017 but rebounded to new highs.
The OPEC Production Cut: The cartel is currently restricting production for at least a year to keep oil prices from tumbling in an oversupplied market showing signs of faltering demand growth. However, the national oil companies (NOCs) of the cartel’s most significant producers are thinking long term and want a share of the profitable oil trading business. The state-held oil firms of OPEC’s largest producers—Saudi Arabia, Iraq, and the United Arab Emirates —plan to significantly boost their respective oil trading businesses in search of additional income from the enormous commercial and marketable oil resources they own.
The NOCs are already competing with the largest independent oil traders such as Vitol, Trafigura, Glencore, Mercuria, and Gunvor; however, the NOCs have one massive advantage over independent oil traders, and that is the fact that NOCs own their oil. The Abu Dhabi National Oil Company (ADNOC), which pumps most of the crude oil from the UAE, plans to launch its own oil benchmark for the region, possibly as soon as November. The new benchmark would be part of a more extensive plan to overhaul its oil trading division and gain more pricing influence for its oil sales. Earlier this year, ADNOC signed strategic partnership agreements with Italy’s Eni and Austria’s OMV, under which the European oil majors bought minority stakes in ADNOC Refining, and the three companies agreed to create a trading joint venture.
US Shale Oil Production: The rapid growth that doubled crude output from the Permian Basin in three years is waning. Oil flows from the formation are set to increase by less than 1% in August from July, data from the Energy Information Administration show. So far this year, the monthly rate has only exceeded 2% once, compared with six times in 2018. Producers are dialing back growth plans due to a myriad of problems, including pipeline jams, slower flows from wells drilled too close together, and higher costs for acreage. The dilemmas are killing returns and keeping investors at bay.
Permian explorers such as Parsley Energy Inc. are cutting their 2019 growth rates by as much as 40 percentage points below last year’s. The number of rigs in the basin has dropped 10% from a peak in November to 437 last week, the fewest since March 2018, according to data from Baker Hughes.
S&P Global Ratings say the number of financially distressed oil and gas companies is increasing as investors lose interest, access to more credit is throttled, and companies struggle to live within cash flows. Consolidation through mergers that lower costs may not prove to be a solution as oil and gas prices stay low, the credit rating agency said. Bankruptcy may be the only option, even for companies that declared bankruptcy during the 2015-2017 oil price trough.
The July issue of the EIA’s Drilling Productivity Report attempts to forecast how much each shale oil basin will change its production in the month ahead. This month the Administration says that US shale oil production will increase by 49,000 b/d from the six largest shale oil basins. For August 2018, the increase was estimated to be 143,000 b/d. These days the estimates are frequently optimistic and are revised downwards when actual production numbers become available six weeks later.
If US shale oil production goes into decline in the next few years, either due to geological conditions or unprofitability, there will be a major change in the nature of the oil business. For now, the major forecasters, including the IEA, are saying it won’t and that there will be plenty of oil into the 2030s or 40s.
2. The Middle East & North Africa
Iran: The standoff within the Gulf took a turn for the worse last Friday when Iranian special forces rappelled from a helicopter onto a Swedish-owned, but UK-registered tanker transiting Omani waters in the Strait of Hurmuz and forced it to sail to an Iranian port. The move was in retaliation for Britain’s seizure of an Iranian tanker trying to slip crude into Syria but was in Gibraltar’s territorial waters at the time it was seized. The EU sanctions on Syria ban any foreign shipments of oil to Damascus.
Before the recent seizure, British Foreign Secretary Hunt offered to return the detained Iranian tanker provided that Iran guaranteed its oil wouldn’t go to Syria. Gibraltar on Saturday freed the four Indian seamen who crewed Iran’s ship. Hunt said last week that he spoke with Iranian Foreign Minister Zarif on “finding a resolution to the current situation and avoiding further escalation.”
The UK has warned Iran that it risks taking a “dangerous path” after the Islamic republic seized the British-flagged tanker and said Britain’s response would be “considered and robust”. Jeremy Hunt, the UK’s foreign minister, made it clear that the UK was seeking to solve the crisis through diplomacy. “We are not looking at military options, we are looking at a diplomatic way to resolve the situation, but we are very clear that it must be resolved,” Hunt told Sky News after meetings of the government’s top crisis management body Cobra on Friday.
Facing vigorously enforced US sanctions directed principally at oil, Iran is focusing on the less targeted strategic areas in its hydrocarbons business, notably continuing to develop its gas sector and building out its petrochemicals and related capacity. One such area is the generation of sufficient gasoline at least to meet its own needs, as its reliance on other countries during the previous sanctions’ era was seen as a national humiliation. Despite the worsening sanctions environment, Iran is now not only self-sufficient for gasoline but is rolling out plans to allow it to export the product.
The increased use of drones by Iran and its allies for surveillance and attacks across the Middle East is raising alarms in Washington. The US believes that Iran-linked militia in Iraq has recently increased their surveillance of American troops and bases in the country by using off-the-shelf, commercially available drones, US officials say. The disclosure comes at a time of heightened tensions with Iran and underscores the many ways in which Tehran and the forces it backs are increasingly relying on unmanned aerial vehicles in places like Yemen, Syria, the Strait of Hormuz and Iraq. Beyond surveillance, Iranian drones can drop munitions and even carry out a “kamikaze flight.”
Iraq: Exports from Iraq’s southern ports reached 3.42 million by the middle of July, two oil officials told Reuters last week. These exports fell to 3.39 million b/d in June from 3.441 million b/d in the previous month. Officials said repairs on a section of a marine pipeline in the Gulf which transports crude oil to the Basra ports slowed shipments for three days in mid-June. Iraq has been under pressure both to lower and to raise production. OPEC members have insisted that all countries should comply with their quotas, while the US has been lobbying for higher output.
Baghdad wants to increase its oil production to 6.2 million b/d by end-2020 and 9 million bpd by end-2023, up from the current 4.6 million b/d and on a par with Saudi Arabia’s output. Government officials have made it clear to foreign and domestic oil field developers alike that increases must be made, or contracts will be reviewed. Three key fields are currently in the spotlight – Rumaila, West Qurna 1, and Gharraf – with more to follow shortly.
Infrastructure constraints, however, may continue to thwart the realization of these ambitions on schedule. Rumaila produced 1.467 million b/d last year, its highest annual rate of production for 30 years. This figure is above the 1.173 million b/d initial target output figure agreed with BP in the original 2008 contract but still well below the plateau target at that time of 2.850 million b/d. The re-negotiated objective for Rumaila is 2.1 million b/d.
An American consortium led by Honeywell is poised to win a major gas deal in Iraq, bolstered by US government lobbying for projects that would reduce Iraqi dependence on Iranian energy. Honeywell, which is partnering with the US firm Bechtel, signed a memorandum of understanding in Baghdad last week to build the Ratawi gas hub.
Libya: Oil revenues dropped in the first half of 2019, according to its central bank. In the first six months of the year, the revenues were down 11.2 percent from the same period in 2018, falling to $10.2 billion in H1. Like most OPEC members, oil is the backbone of the Libyan economy, representing 92.8% of its total income.
Despite the sagging revenue, oil production in the first two quarters of 2019 was higher than in 2018, according to OPEC secondary sources found in its Monthly Oil Market Report. However, oil prices were less favorable at the beginning of 2019 than they were at the beginning of 2018, with the OPEC basket price the first week of January in 2019 running about $10 under the level it was trading at that same time during the year prior.
3. China
China’s growth fell to its slowest pace in nearly three decades, officials announced last week, as a resurgence of trade tensions with the United States and lingering financial problems take an increasing toll on one of the world’s most important economic engines. Officials said the economy grew 6.2 percent between April and June compared with a year earlier. While such economic growth would be the envy of most of the world’s countries, it represented the slowest pace in Chinese economic growth since the beginning of modern quarterly record-keeping in 1992. Numerous outside analysts have noted that official statistics probably paint too flattering a picture of the Chinese economy. Per-capita income may be a quarter lower than reported, based on a study of nighttime light co-authored by Yingyao Hu of Johns Hopkins University. Alternative data such as tax collections suggest growth was 1.8 points lower than reported from 2010 to 2016, Chang-Tai Hsieh of the University of Chicago and three co-authors conclude.
China rebuffed a suggestion from President Trump that Beijing needs a trade deal with the United States because its economy is slowing, saying this was “totally misleading” and that both countries wanted an agreement. Trump, in a Monday tweet, seized on slowing economic growth in China as evidence that US tariffs were having “a major effect” and warned that Washington could pile on more pressure.
Trump warned that the US-China trade war could ratchet up further if the United States wants. In a cabinet meeting last Tuesday, Trump said, “we have a long way to go as far as tariffs, where China is concerned if we want.” “We have another $325 billion that we can put a tariff on if we want,” he continued. In the meeting, the president confirmed that the US is currently talking to China about a deal but added that he wished China “didn’t break the deal that we had.”
Chinese crude oil throughput hit a new record in June as two new large refineries started up, driving processing rates higher, according to official data from China. Last month, Chinese refineries increased crude throughput by 7.7 percent year on year, to around 13.07 million b/d. Throughput, however, is not expected to break the new record from June at least in the next few months, as there would be extended shutdowns amid high diesel and gasoline inventories and weak domestic fuel demand.
Thanks to demand from the start-up of the two large refineries, Chinese crude oil imports in June also increased, by 1.7 percent from May, and by 15.2 percent from June last year. China’s crude oil imports in June averaged 9.63 million b/d, up from the average of 9.47 million bpd in imports in May, and a 15.2-percent increase from 8.36 million b/d in June last year.
To meet the growing demand for electricity, China’s biggest power generator, China Energy Group, is planning to build 11 gigawatts (GW) of new coal power during this and next year, according to a senior official with the firm on Thursday. More than 6 GW of new ultra-low emission coal-fired capacity will be added this year while another 5 GW is planned for 2020, the head of the state-run firm’s coal-fired power department, told Reuters. “China still has quite a big demand for electricity. The government now supports regions with poor wind and solar resources to use coal-fired power … it’s a more practical measure, as gas is still too expensive,” said Xiao. China Energy, which operated coal-fired plants with a total capacity of 175 GW, is planning to gradually replace small, polluting coal-fired power units with efficient ones.
As could be expected, China’s greenhouse gas emissions jumped by 53.5 percent in the decade between 2005 and 2014, according to Chinese government figures.
4. Russia
A small oil transport firm accused of pumping toxic chemicals into Russia’s crude pipeline network received daily documents from state pipeline monopoly, Transneft, giving its oil deliveries a clean bill of health. The documents seen by Reuters certified the oil deliveries from March 30 to April 19, the period when the worst contamination of Russian oil in decades was taking place.
Russian prosecutors have detained two executives with the small oil transport firm, which is called Nefteperevalka. At an April 30 meeting with Putin, Transneft boss Tokarev said the contamination was the fault of an unnamed local oil company that supplied poor-quality oil as part of a criminal scheme. The firm to blame for the contamination “takes care of the quality of this oil, the certification of that quality, and then transmitting it into the trunk pipeline network,” Tokarev was quoted as telling Putin in a transcript released by the Kremlin.
The alarm was first raised about the contamination on April 19 after the tainted oil reached Russia’s western neighbor Belarus. The oil would have taken around eight days to travel the roughly 1,000 km from the Samara region, based on the average speed at which oil flows through the pipeline. Although the fighting over who pays for the debacle continues, the final bill could easily run into the hundreds of millions or even billions of dollars.
Gazprom’s natural gas exports outside the former Soviet Union declined by 5.6 percent to 102.8 billion cubic meters between Jan. 1 and July 15 compared to a year earlier. Gazprom’s natural gas output over the same period rose by 2.3 percent to 276.3 billion cm from a year earlier, the company said.
8. The Briefs (selections from the press – date of article in Peak Oil News is in parentheses – see more here: http://www.news.peak-oil.org)
Oil majors are investing in various alternative energy solutions in response to increased investor pressure to start thinking about reducing emissions instead of just growing profits. Some supermajors are investing in EV charging networks, others in research and development of advanced lower-emissions technologies, and a few others are looking into hydrogen and its various possible uses as a clean fuel–not only for cars but also for heavy industries and home heating. (7/17)
The world’s oil tankers risk losing almost a third of their value should a shift away from fossil fuels gain momentum in the coming decades, a new report has warned. The $160bn tanker market is “most exposed” to a low carbon energy system given that it is dependent on fossil fuels with few alternative cargos available. (7/17)
Compliance with the International Maritime Organization’s global sulfur limit for marine fuels will likely settle around 90% or 95% in the initial years after 2020, well above some industry estimates that pointed to compliance of 70%-80% a year ago, a bunker industry veteran and senior partner at 2020 Marine Energy, Adrian Tolson, said at an industry event Monday. (7/17)
The United Arab Emirates’ state-run ADNOC, long seen as one of the most conservative oil firms in the Middle East, plans an overhaul for its trading operations as it seeks to emulate the success of rival oil majors and bolster its regional influence. The company has splurged on hiring former employees of private-sector peers and wants to launch a regional oil benchmark, possibly this year, similar to international markers Brent and WTI, four sources familiar with the plans said. (7/17)
India’s government doesn’t plan to completely ban diesel and gasoline vehicles because continuously rising fuel demand has to be met by a combination of fossil fuels, biofuels, and electric vehicles, Indian Oil Minister Dharmendra Pradhan said on Tuesday. India plans to significantly boost the use of electric vehicles in the coming years. (7/17)
China’s LNG push: Thanks to its massive coal-to-natural gas switch, China became the world’s second-biggest LNG importer in 2017, surpassing South Korea and second only to Japan. Demand for natural gas in China will continue to grow in the coming years. According to the IEA, China is set to surpass Japan as well, with Beijing’s imports expected to surge to more than 100 bcm in 2024. (7/17)
In China, a massive explosion has been reported at the Yima gas plant in Henan province, damaging buildings in a 3-kilometer radius. As of Sunday, Chinese news outlets report 15 dead and 15 seriously injured.
Argentina’s surging shale oil production is feeding more supplies to the country’s refineries, helping to increase run rates, the Neuquen government said Wednesday. Refineries operated at an average of 78.3% of capacity in May, the highest rate in seven months, the state statistics agency Indec reported Monday. The increase is a direct result of the takeoff of Vaca Muerta, a giant shale play. Vaca Muerta is leading a recovery in the country’s oil production, which rose 4.2% to 505,651 b/d in May from 485,165 b/d a year earlier. (7/17)
In Brazil, two Iran-flagged vessels have been sitting idle in ports for weeks because they need fuel to return to Iran, but Brazil’s Petrobras refuses to sell them fuel because of the U.S. sanctions on Iran that could also affect the Brazilian state energy firm listed in New York. The ships carried urea (for fertilizer) to Brazil and planned to return carrying corn. (7/20)
In Delta, British Columbia, the recently expanded Tilbury LNG terminal has won its first export contract. FortisBC stated that it will produce LNG for Top Speed Energy Corp. to export to China under a two-year term supply agreement. Under the agreement, 53,000 tons of LNG a year – approximately 60 standard-sized ISO shipping containers per week – will be shipped from Tilbury to China by the summer of 2021. (7/17)
In Kitimat, BC, Chevron Corp. is seeking approval to modify its plans for a liquefied natural gas export facility on to an all-electric design that it says will result in the lowest greenhouse gas emissions per ton of LNG of any large project in the world. Chevron and its partner Woodside Petroleum Ltd. earlier this year had announced they’d applied to expand the capacity of their LNG project on Canada’s Pacific coast by as much as 80% to 18 million metric tons a year. That triggered a new federal screening of the project. (7/16)
The U.S. oil rig count declined by five to 779, according to GE’s Baker Hughes. That’s down 79 rigs, over 9%, from last year at this time. (7/20)
Huge GOM lease sale: The U.S. Secretary of the Interior David Bernhardt and Bureau of Ocean Energy Management (BOEM) announced Thursday that BOEM proposes to offer 77.8 million acres for a region-wide lease sale. The sale is scheduled for August 21, 2019 and would include all available unleased areas in federal waters of the Gulf of Mexico. (7/20)
The Philadelphia Energy Solutions refinery in Pennsylvania, the oldest and largest one (335,000 b/day) on the U.S. East Coast, is expected to shut its remaining units on Monday as the plant uses up the last of its crude supplies. (7/17)
“Homeless crude”: A June 21 fire and explosion set to permanently close the biggest oil refinery on the U.S. East Coast has shaken markets as far away as the North Sea and West Africa, leaving millions of barrels of unsold oil in need of a new home. The Philadelphia Energy Solutions (PES) refinery was a consistent buyer of light sweet crude oil, and the backlog of cargoes bound for PES are either in limbo or in the process of being diverted to neighboring refineries and abroad. Prices for physical crude oil are being squeezed, with as many as 20 million barrels bound for PES in the process of being rerouted. (7/20)
LNG growth: The U.S. will surpass current market leaders Australia and Qatar to become the world’s biggest liquefied natural gas (LNG) exporter in 2024, a high-ranking official at the International Energy Agency (IEA) said on Tuesday. The U.S. exports of LNG are expected to exceed 100 billion cubic meters (bcm) in 2024. (7/17)
Permian Basin gas prices averaged their highest since mid-March during the past week propelled by rising summer demand in local and regional markets. Over the past seven days, cash prices at Waha have averaged 97 cents/MMBtu, up from negative territory during the first week of July. On Friday, prices were down nearly 40 cents from the prior-day settlement, trading around 37 cents/MMBtu. (7/20)
EV school buses: The California Energy Commission approved nearly $70 million in funding to replace more than 200 old diesel school buses with all-electric buses that will reduce school children’s exposure to harmful emissions and help the state reach its climate and air quality goals. (7/16)
RE nosedive: A marked decline in spending on renewable energy projects during the first half of the year has suggested that wind and solar have yet to become fully competitive with fossil fuel power generation despite the wealth of reports saying they already are cheaper in some parts of the world. Bloomberg NEF reports that spending on renewable projects between January and June totaled US$117.6 billion, which was 14 percent less than a year earlier and the lowest amount for a comparable period since 2013. (7/17)
China’s battery boom: China is set to become the single biggest energy storage market in the Asia Pacific region by 2024, according to consultancy group Wood Mackenzie. The company’s July 9th report states in no uncertain terms that the country is poised to take over the energy storage market, as its “cumulative energy storage capacity is projected to skyrocket from 489 megawatts (MW) or 843 megawatt-hours (MWh) in 2017 to 12.5 gigawatts (GW) or 32.1GWh in 2024. (7/15)
In Germany, power production from North Sea wind farms from January to June totaled 9.51 terawatt hours (TWh), 16% more than in the same 2018 period. Offshore wind from North Sea turbines had retained a 15% share of Germany’s total wind power production of nearly 64 TWh in the last six months. (7/15)
In India, nearly 75 percent of power is still generated from coal. While coal-fired power generation is still growing, ambitious clean energy policies and falling solar costs could soon stop this trend. Since demand for energy in India is set to double over next decade caused by the rapid growth of its economy and population, its complete rejection of coal dependence in the near future seems far too big of a challenge. (7/17)
America’s biggest solar power developers are stockpiling panels to lock in a 30% federal tax credit set to start phasing out next year, a strategy that could backfire if projects do not materialize or panel prices slide substantially. Duke Energy, 8minute Solar Energy and Shell-backed Silicon Ranch are among those working to claim the full subsidy, which is available to firms that either start construction or spend 5% of a project’s capital cost by the end of 2019. (7/20)
French extreme weather: France’s restrictions on crop irrigation are staggered by region, ranging from a one-day ban each week to a total prohibition of water usage in agriculture. France’s dryness stems in part from an abnormally hot summer in Europe, part of a broader trend of rising global temperatures. Temperatures spiked to never-before-seen levels across the south of France earlier this summer, exceeding 114 degrees Fahrenheit in late June. In Paris, there has been no precipitation since June 21. (7/17)
US CO2 down? The decrease in coal-derived energy in favor of natural gas-derived energy has the EIA forecasting that the CO2 emissions in the U.S. will fall in 2019, according to a new report. In the year prior, energy-related CO2 emissions in the United States had increased by 2.7%. (7/16)
In California, fracking for oil and gas is about to get a lot more difficult. Last week, California Governor Gavin Newsom sacked the state’s top oil regulator after the Desert Sun reported that fracking permits in California doubled in the first six months of this year without the Governor’s knowledge. (7/16)
African corruption: The bulk of an estimated $90 billion that left Africa annually through illicit financial flow to overseas might have come from Nigeria. The Chairman of the Independent Corrupt Practices and Other Related Offences Commission made the disclosure on Thursday at the 2019 Africa Union Anti-Corruption Day in Lagos. (7/15)
Peak Oil Review 15 July 2019
By Tom Whipple, originally published by Peak-Oil.org
https://www.resilience.org/stories/2019-07-15/peak-oil-review-15-july-2019/
Quote of the Week
[Europeans on Iran and the US sanctions] “They have sovereignty and self-respect at issue here. They’re trying to say we’re going to do Iran trade; we’re going save the nuclear deal and provide a mechanism; and we don’t appreciate being unilaterally dictated to.”-Sanjay Mullick, a sanctions lawyer at Kirkland & Ellis LLP.
Graphic of the Week
Global Crude plus Condensate Production
Graphic from ShaleProfile
1. Oil and the Global Economy
The storm in the Gulf of Mexico and geopolitical tensions in the Middle East pushed New York oil futures above $60 a barrel last week, with NY closing at $60.31 and Brent at $66.86. Nearly 70 percent or 1.3 million b/d of the Gulf’s oil production was shut in as oil producers evacuated 283 platforms in the northern Gulf. Natural gas production from the Gulf was cut by 56 percent. The slow-moving storm is producing unprecedented flooding, and it may be the middle of the week before the extent of the damage to onshore oil and petrochemical facilities is known.
The IEA issued its monthly report last week forecasting that surging US oil production will outpace sluggish global demand and lead to a significant increase in the world crude inventory during the next nine months. OPEC also predicted that the world oil glut is forming despite the cartel’s efforts to restrain production. “Market tightness is not an issue for the time being, and any rebalancing seems to have moved further into the future,” the IEA said. The demand for OPEC crude oil in early 2020 could fall to only 28 million b/d, with non-OPEC expansion in 2020 rising by 2.1 million b/d — a full 2 million b/d of which is expected to come from the United States. At current OPEC output levels of 30 million b/d, the IEA predicted that global oil stocks could rise by 136 million barrels by the end of the first quarter of 2020.
The Agency expects that the demand for oil will not decline in the next two years as an improvement in the China-US trade situation and continued growth in the US economy offsets deteriorating trade and manufacturing elsewhere. In recent years, the IEA has been highly optimistic about the prospects for the US shale oil industry. This optimism is not without cause as the industry has achieved remarkable gains in production during the last three years. Whether the Agency’s optimism is justified at a time when there are increasing signs of slowing production growth is a crucial question.
The US’s Energy Information Administration is not as optimistic as the IEA, saying on Tuesday that it expects global oil consumption to average 101 million b/d in 2019, up 1.1 million b/d from 2018, an indicator that demand is growing at a slower rate than previously expected. That 1.1 million b/d in growth is 200,000 b/d lower than what EIA forecast in June and marked the sixth straight month that the EIA lowered its forecast for global oil consumption in 2019.
The OPEC Production Cut: OPEC’s oil production dropped by another 68,000 b/d to 29.83 million in June, as output from Iran and Libya—exempt from the production cut pact—and other members offset substantial increases in Saudi Arabia and Nigeria. The most significant drop in production was Iran’s, whose crude oil production fell by 142,000 b/d to 2.225 million, due to the US sanctions. Iran’s oil output is now more than a million b/d down from its 2018 average of 3.553 million to OPEC’s secondary sources. Tehran has stopped supplying production figures directly to OPEC.
The OPEC+ agreement to extend oil production cuts until the end of the first quarter of 2020 will lower oil inventories, help stabilize the market and address price volatility, Iraqi Oil Minister Thamer Ghadhban said on Wednesday. Asked about OPEC’s position on prices, Ghadhban noted that the general view is that $70 per barrel or higher was acceptable, adding that the producer group is seeking prices that are fair to consumers and producers alike.
US Shale Oil Production: Total US crude output increased by 246,000 b/d in April, the latest month for which trustworthy data is available, and the EIA expects output to grow by another 70,000 b/d in July, with the Permian alone adding 55,000 b/d. However, the rate of growth is slowing. In April, production was up 1.6 million b/d compared to the same month in 2018. This is a massive increase, but it is down sharply from the nearly 2.1 million b/d year-on-year increase seen in August 2018, which looks set to be the peak in terms of the pace of growth.
Graphic from Oilprice.com
Currently, none of the organizations and analysts watching the shale oil industry is talking about a decline in US shale oil production, but the rate of growth clearly is slowing as the rig count drops, and Wall Street turns its back on an unprofitable industry. While many are saying that future growth of the global oil industry is tied to the growth of production from the Permian Basin, no one has been willing to connect the dots and say that a decline of Permian output would lead to a shrinking global economy and all that would imply.
Despite a steady stream of stories in the financial press discussing the woes of individual shale oil production companies that are certain to fail due to massive debt and unprofitability, there is a blind eye to what this means. Some assume that the increasing presence of the large oil companies in the shale oil business will turn the industry around and lead to decades of profitable oil production. The profitability of large oil companies producing shale oil remains to be seen.
2. The Middle East & North Africa
Iran: The US sanctions are crippling the Iranian economy and its main export, oil. The fourth quarter of Iran’s calendar year—December 2018 through March 2019—saw the inflation rate surging to 26.9 percent and an unemployment rate at 12.1 percent. After March, Iran’s inflation climbed further and stood at 37.6 percent in June, according to the National Council of Resistance of Iran. The decision to challenge the United States by boosting its uranium enrichment beyond limits in its 2015 nuclear deal has deepened fears among Iranians that their country will remain in crisis mode for the foreseeable future. On Wednesday, the US accused Iran of “nuclear extortion” and threatened further sanctions against Tehran, although it is difficult to see what is left to sanction.
Britain’s seizure of an Iranian tanker passing through Gibraltar waters on the way to Syria has added a new dimension to the confrontation. Last week Iranian gunboats attempted to retaliate by trying to stop a British tanker passing through the Straits of Hormuz. The small Iranian boats were driven off by a British warship. The situation in the region is deteriorating as the confrontation grows. Tankers are shunning the port of Fujairah in the UAE, the main refueling hub of the Middle East, following the two attacks involving oil tankers in the area in the past six weeks. Insurance rates for tankers going through the Strait of Hormuz have skyrocketed tenfold in the two months since the first attacks.
Washington is still attempting to step up the pressure on Tehran. The US views Chinese imports as weakening the ‘maximum pressure’ on Iran. As China is believed to be importing some 150,000-200,000 b/d of Iranian crude, the US will sanction China if it continues to import Iranian oil in violation of American sanctions. A State Department spokeswoman said last week, “We’re going to zero [exports of Iranian crude] and … countries that don’t abide by US sanctions will face repercussions.”
Iraq: Baghdad, naturally, is concerned that any disruption in oil exports flowing through the Strait of Hormuz will be a disaster for its economy as oil provides the country with 89 percent of its revenue. With few options available, Iraq’s cabinet approved a plan to build a pipeline to send the output of oil fields in Rumaila to Aqaba in Jordan. The 1 million b/d pipeline has been under consideration for years but finding financing has been a problem. Rumaila is located in southern Iraq, which means the pipeline would need to pass through several Iraqi provinces to reach Jordan and security is still a concern for investors. Years ago, Iraq had a pipeline running north to Turkey’s port of Ceyhan, but insurgents blew it up so frequently Baghdad abandoned it.
Saudi Arabia: Oil production will remain below 10 million b/d through August and exports will stay under 7 million b/d to avoid excess stock buildup. The Saudis, which are pumping below its 10.31 million b/d quota under the OPEC+ agreement, expect the positive outcome in the US-China trade talks at G20 will help to boost demand in the second half of this year.
Saudi Aramco awarded 34 contracts with a total value of $18 billion for engineering, procurement, and construction projects at its Marjan and Berri oilfields. The company plans to boost production capacity at the two fields by 550,000 b/d and 2.5 billion standard cubic feet a day of gas. The company’s maximum sustained oil output capacity is currently 12 million b/d.
Two weeks ago, the Saudis announced that they will issue their first Euro-denominated bonds, following the recent bond issue from Saudi Aramco. At around the same time, Crown Prince Mohammed bin Salman said that the long-delayed initial public offering of 5 percent of Saudi Aramco may occur as early as next year. The prestige of the Crown Prince is wrapped up in the Aramco IPO even though many advisors believe that the government would be better off issuing more Aramco bonds rather than selling equity in the company.
3. China
The United States and China are relaunching trade talks this week after a two-month hiatus. However, a year after the trade war began there is little sign their differences have narrowed. After meeting with Chinese President Xi Jinping in Japan in late June, US President Donald Trump agreed to suspend a new round of tariffs on $300 billion worth of imported Chinese consumer goods while the two sides resumed negotiations. Trump said that China would restart large purchases of US agricultural commodities, and Washington would ease some export restrictions on Chinese telecom equipment giant Huawei Technologies. The course of these talks likely remains one of the most critical factors in the demand for oil and oil prices during the next few years.
China’s refiners likely will cut their output in the third quarter after supply from new refineries increased an already-sizeable glut. Private refiner Hengli Petrochemical ramped up its 400,000-b/d plant in northeast China to full capacity in May, while Zhejiang Petrochemical began trial runs at a similar-sized refinery on the east coast. In the wake of a wave of fresh supply and amid slowing local demand for fuels, refiners are cutting their crude processing. A decline in the pace of refining probably would result in lower Chinese crude imports.
China set a crude oil import record in April and continues to import growing volumes of crude oil this year. Beijing’s imports are an estimated two-thirds of global oil demand growth so far in 2019. However, actual Chinese oil consumption patterns lately suggest that the U.S.-China trade war has hit China’s industrial production and that nearly half of the rise in crude imports have gone into storage so far this year. China’s crude oil imports suggest that first-half imports jumped by 8.8 percent from the same period last year, or by around 800,000 b/d, according to estimates from Reuters. Imports and domestic production, minus refinery runs, suggests that between January and May, China put 1.21 million b/d into either commercial or strategic storage, compared to 850,000 b/d put into storage in the same period last year,
Sales of passenger cars in China fell 14 percent in the first half of the year compared with 2018, putting automakers on track for a historic second year of sales declines. China’s car market shrank for the first time in almost three decades in 2018 due to receding consumer confidence and cuts to government subsidies.
4. Russia
Russian oil production fell close to a three-year low in early July, as a row between Russian oil pipeline monopoly Transneft and the country’s biggest producer Rosneft undermined output. Transneft curbed oil intake from Yuganskneftegaz, Rosneft’s principal upstream unit, the oil producer said, hurting production that has already been depressed by the oil contamination crisis. Rosneft confirmed intake limits first reported by Reuters. Transneft also confirmed to local media it had capped the amount of oil received from Yuganskneftegaz. Transneft said it put the restrictions in place after Rosneft sent oil to the pipeline network without clearly stating the destination for 3.5 million tons of crude.
Transneft and Rosneft have been at loggerheads over efforts to resolve the problem of contaminated oil found in April in the Druzhba export pipeline to Europe. Supplies have only partially resumed since then, after weeks of disruption. Transneft criticized Rosneft on Monday over its handling of the tainted oil issue, saying the oil producer had dragged its feet over setting up quality controls for its oil and had made unsubstantiated claims from the pipeline firm. Transneft transports 83% of Russian oil via its network, while Rosneft accounts for over 40 percent of Russian output.
Russia’s second-largest oil producer, Lukoil, has restored its oil supplies to customers after the contamination of the Druzhba oil pipeline disrupted Russian crude supply to the west for weeks in the spring. Lukoil shipped its oil through other export channels, including by sea, “which made it possible to avoid negative consequences of breaking export contracts.”
5. Nigeria
In recent months, Nigeria increased its oil production to 2.3 million b/d again as opposed to 1.6 million b/d it was producing three years ago when insurgents were damaging pipelines and production facilities across the Niger Delta. However, Shell Nigeria says security remains a challenge due to the theft of crude oil and vandalism of oil and gas facilities. Illegal activities result in the loss of some 11,000 barrels of crude oil each day. Third party interference caused close to 90 percent of the larger spills. According to a study by the Nigeria Natural Resource Charter, Nigeria loses between $7 billion and $12 billion to crude oil theft annually. This amounts to much more than ten times what Nigeria spends on health.
The price of gasoline, N145 per liter in Nigeria, is the lowest in the West Africa sub-region, where the average cost is N350 per liter. This “cheap gas” policy is leading to more smuggling and insufficient revenue for the National Petroleum Corp.
6. Venezuela
More trouble hit Venezuela as an electricity blackout on July 7 halted operations at the 635,000-b/d Amuay and the 305,000 b/d Cardon refineries. The two refineries account for over 70 percent of Venezuela’s refining capacity. The facilities were expected to come back online as soon as July 10, but lingering damage to power plants and refineries could hamper a full restoration of power.
Venezuela’s oil production has been in decline for years, but plunged by 142,000 b/d in February, and 289,000 b/d in March, as sanctions scared away buyers. Venezuelan production averaged 1.354 million barrels per day in 2018, but that figure fell to just 732,000 b/d in March of this year. Output has held up surprisingly well since then, stabilizing at lower post-sanctions levels. According to S&P Global Platts, Venezuela’s production stood at about 760,000 b/d in June.
In January, the US government tightened sanctions on Venezuela but issued a series of waivers to oil companies operating in joint ventures with PDVSA in Venezuela. The logic, in addition to shielding American companies from sanctions, was to keep the oil sector alive long enough that it could provide an economic foundation for the new government under Juan Guaidó. But the regime change effort has stalled.
The waivers expire later this month, and the US government is considering letting them expire as a way to further tighten the fiscal noose around the Venezuelan government. That could affect operations for Chevron, Halliburton, Schlumberger, Baker Hughes, and Weatherford International. If the Trump administration follows through, the companies would have 60 to 90 days to wind down their operations.
7. The Briefs(selections from the press – date of article in Peak Oil News is in parentheses – see more here: http:www.news.peak-oil.org)
UK not vulnerable: Iran’s alleged attempt to disrupt the passage of a UK crude tanker through the Persian Gulf has added to fears in oil markets, boosted prices and raised insurance costs for shippers. But for the UK itself oil is not the issue or a particular vulnerability. The country imports hardly any crude from the Middle East to the point where it spent more on olive oil imports last year than it did on petroleum from the Gulf. (7/12)
European oil problem: Water levels along the Rhine river, a key waterway for transporting commodities and other products from coastal areas to inland locations in France, Germany and Switzerland, fell to their lowest since May 21. Levels at Kaub, Germany have been steadily declining since late June. Oil barge brokers said the low water levels meant barges were leaving the Amsterdam-Rotterdam-Antwerp refining and storage hub to inland locations not fully laden. Water levels along the river hit a record low in October, which led to oil product shortages in Germany and Switzerland. (7/13)
Pirates hurt Nigeria: Despite Nigeria’s effort to curb the menace of pirate attacks on vessels particularly in the Gulf of Guinea, Nigeria has continued to lead other countries of the world that are bedeviled by the negative impact of pirates. In the report covering January – June 2019, Nigeria led the table of pirate attacks with 21 recorded incidents between January and June, as against 31 for the period of 2018, thereby beating Indonesia which recorded 11, Venezuela 6 attacks and Peru with 4 attacks in six months. (7/10)
Eastern Canada is vulnerable to any shutoff of two major pipelines from the US north. Michigan governor Gretchen Whitmer has vowed to shut down Line 5; her Attorney General has launched a lawsuit to that end. Operated by Enbridge, Line 5 has a capacity of 540,000 b/d of crude oil and natural gas liquids. It’s a vital source of supply for the Sarnia refinery complex that satiates Central Canada’s energy needs. (7/12)
The US oil rig count fell by four to 784 while active gas rigs also declined by two to 172, according to GE’s Baker Hughes. The combined oil and gas rig count is now 958 for the week, with oil seeing a 79-rig decrease year on year and gas rigs down 17 since this time last year. The combined oil and gas rig count is down 96 year on year. More than half the total US oil rigs are in the Permian basin in West Texas and eastern New Mexico, where active units decreased by six this week to 437, the lowest since March 2018. (7/13)
Permian pause: Despite the bustling shale drilling activity in the Permian, it led all major basins in losses this week, dropping six rigs. This brings the Permian’s active number of rigs to 437. However, the Permian still accounts for almost half of the U.S.’ total number of active rigs. (7/13)
Diesel demand hiccup: A disappointing planting season due to massive flooding in the US Midwest this spring is expected to have spillover effects on diesel demand during harvest season, analysts and traders said. Heavy storms that lingered over the Midwest left millions of acres unseeded and put crops that were planted late at a greater risk for damage from severe weather during the growing season, which is expected to reduce overall harvested acres in the fall. (7/11)
Alaska’s governor won a showdown on Wednesday with lawmakers trying to reverse his bid to slash spending on higher education by 40%, but opponents vowed to keep fighting the unprecedented cut, which university officials have warned would wreak havoc. Republican Mike Dunleavy, in his first year as governor, wants deep cuts in education and other programs to help pay for his chief campaign promise – a sharp increase in the annual oil revenue dividend Alaska pays to each resident. (7/11)
Natural gas bottlenecks: America is awash in natural gas. Yet in parts of the country there isn’t any extra to burn. Earlier this year, two utilities that service the New York City area stopped accepting new natural-gas customers in two boroughs and several suburbs. Citing jammed supply lines running into the city on the coldest winter days, they said they couldn’t guarantee they’d be able to deliver gas to additional furnaces. (7/8)
Demand for US thermal coal will “erode significantly” between 2020 and 2030 as total use for US power generation could fall to as little as 11% based on scheduled and likely retirements, Moody’s Investors Service wrote in a report. Mines in the Powder River Basin are expected to be the hardest hit as thermal coal generation declines. (7/11)
Solar vs. air pollution: Cleaning up China’s hazy skies would increase electricity generation from the country’s vast array of solar panels by 13 per cent and provide billions of dollars of extra revenue. China has more installed solar power capacity than any other country, at 170 gigawatts at the end of 2018. But it also has one of the world’s worst air pollution problems. Now we know there could be a big economic benefit to the action too, as clearer skies boost the power-generating potential of solar panels. (7/10)
EU renewables winning share: Ever since 2013, the installation of new renewable energy capacity has outstripped all other major energy generating sources combined, coal, oil, gas and nuclear. There are impressive figures for all renewables but the growth and fall in costs of solar power has stunned even seasoned industry observers. (7/12)
Nuclear booster: The US plans to extend the lifespans of existing nuclear reactors and support new technologies as it seeks to revive an industry seen as crucial to its energy security. A US Deputy Secretary said that both technologies were crucial for reducing carbon emissions and boosting energy security. The US nuclear industry has been in the doldrums for years because of competition from cheap natural gas and falling wind and solar power costs. (7/12)
Japan’s nuclear issue: The most severe challenge facing policy-makers and the nuclear industry in Japan is the loss of public confidence in this type of energy. For instance, the 2015 Japan Atomic Energy Relations Organization survey found that 47.9 percent of respondents want nuclear power abolished gradually. 14.8 percent think it should be halted immediately. Only 10.1 percent said that the use of atomic energy should be maintained, and 1.7 percent said it should increase. (7/12)
India’s nuclear issue: India continues to hold technical and commercial discussions with Westinghouse for arriving at a project proposal for nuclear reactors in the state of Andhra Pradesh. India and Westinghouse have been negotiating the US supply of nuclear reactors for more than a decade, and earlier this year, India and the US committed to building six nuclear power plants in India as part of strengthening their civil nuclear cooperation and security. (7/11)
Rare earths scramble: The Pentagon is assessing the United States’ rare earths capability in a race to secure stable supplies of the specialized material amid the trade conflict with China — which controls the rare earths industry. The push comes weeks after China threatened to curb exports to the US of rare earths, a group of 17 minerals used in building fighter jets, tanks and a range of consumer electronics. (7/13)
Sales of passenger cars in China fell 14 percent in the first half of the year compared with 2018, putting automakers in the world’s largest market on track for a historic second year of sales declines. China’s car market shrank for the first time in almost three decades in 2018 due to receding consumer confidence and cuts to government subsidies. (7/10)
EU driverless cars: A handful of European startups are developing driverless cars to navigate the clogged, chaotic, rain-swept roads of European cities. Startups such as Oxbotica, FiveAI and Wayve that are testing cars in Britain say the old continent is a unique proposition with quirks and challenges that tech giant Alphabet’s Waymo, Uber, Aurora and others have yet to crack. (7/11)
UK vehicle test: Three months since the introduction of the Ultra-Low Emissions Zone in London, results of a year-long trial in the capital suggest that plug-in hybrid electric commercial vehicles could present the most practical, readily available option for businesses trying to meet clean-air targets in cities. (7/9)
Vehicle fatality increase: The arrival of ride hailing is associated with an increase of approximately 3 percent in the number of motor vehicle fatalities and fatal accidents, according to research from the University of Chicago Booth School of Business and Rice University. The researchers used the staggered roll-out dates from Uber and Lyft to review the eight quarters before and after ride hailing adoption in large US cities from 2001 to 2016—analyzing traffic volume, transportation choices and accidents to arrive at their conclusion. (7/9)
EV charging stations: As of May 2019, there were more than 68,800 Level 2 and DC fast charging units throughout the US. Of that total, 16 percent, or approximately 10,860 units, were DC fast chargers that make long-distance travel more practical for electric vehicles. A DC fast charger adds 60 to 80 miles of range per 20 minutes of charging, while a Level 2 charger adds 10 to 20 miles of range per hour of charging. California has the most EV charging units of any state at 22,620, which represents about a third of the nationwide total. (7/9)
VW pushes EV partnerships: Volkswagen will create joint ventures and help finance battery production to persuade skeptical cell suppliers to back its aggressive push for mass producing electric vehicles. VW has said it will buy 50 billion euros ($56.57 billion) worth of battery cells and has identified Sweden’s Northvolt, South Korea’s SKI, LG Chem and Samsung SDI as well as China’s CATL as strategic partners. (7/8)
Electric scooter wars: Almost half of the electric-scooter companies in Paris have suspended or scaled back operations in the past week, after the French capital’s mayor swore to crack down on the “anarchy” caused by the sudden proliferation of thousands of new two wheeled vehicles on its streets. At the same time, many of the same start-ups are rushing to launch in cities across Germany, after Europe’s largest economy legalized the vehicles last month. (7/8)
Climate censorship: A State Department intelligence analyst has resigned in protest after the White House blocked portions of his written testimony to a congressional panel to exclude data and evidence on climate change and its threat to national security. The analyst, Rod Schoonover, prepared a written report citing peer-reviewed scientific journal articles and intelligence reports, which conclude that climate change could have wide-ranging national security impacts. (7/11)
Peak Oil Review 8 July 2019
By Tom Whipple, Steve Andrews, originally published by Peak-Oil.org
https://www.resilience.org/stories/2019-07-08/peak-oil-review-8-july-2019/
Quote of the Week
“Those production gains came even as the rig count has continued to slide. Longer laterals and more intense fracking operations have led to years of soaring output. The problem for shale companies is that the profits have never really arrived. The downturn in oil prices since the fourth quarter of last year was the final straw for some investors. Access to financing has become increasingly closed off, and the mood among shale drillers has soured notably in recent months.”
Nick Cunningham, Oilprice.com
Graphic of the Week
Production from the Permian Basin, by year of the first flow (Through March)
Graphic from ShaleProfile
1. Oil and the Global Economy
Concerns about the weakening global economy and oil demand growth trumped Middle Eastern tensions and the OPEC+ rollover of the production cuts into 2020, sending oil prices lower for most of last week. Prices rebounded on Friday by a dollar or so with London futures closing out the week at $64.27, down about $2.50 from the week’s high on Tuesday, and New York closing at $57.61. Now that the OPEC+ efforts to force up oil prices are out of the way for another nine months, attention is focusing on US shale oil production, the slowing global economy, the US-China trade dispute, and the increasingly serious effects of climate change.
Despite the announcement last week that US-China trade talks will resume shortly, Beijing is warning that the two sides are still far apart, and the US must rescind its tariffs on Chinese goods before any settlement is reached. The global economic situation seems set for a downturn with leading economic indicators sounding warnings across the world.
Hardly a week goes by without news of some new climate-change induced disaster across the world. Much of the US corn-belt is too wet to plant this year; Chennai, a city of 7 million in India, is out of water while across the country Mumbai is being flooded; and new temperature records were set last week from France to Alaska as unprecedented heat waves settled in.
Major European oil companies are starting to talk publicly about the relationship between carbon emissions and global warming and are suggesting that their business models might have to change. These changes might involve shifting to an emphasis on renewable sources of energy and leaving at least some of their fossil fuel reserves in the ground. With current technologies, economic growth requires ever-increasing consumption of fossil fuels. Projections of energy consumption 20 or 30 years from now by government and private forecasters show increased carbon emissions.
In recent months the debate over global warming vs. economic growth has intensified and could become “a” if not “the” major political issue in many countries as the effects of climate change disrupt life and economies around the world. Twenty years ago, peak oil was thought of as primarily a geological phenomenon under which the world would run short of oil reserves which could be extracted at affordable prices. While this still may be the case, concerns about global warming are growing to the point that growth-limiting restrictions on carbon emissions may someday in the foreseeable future come to limit oil production.
The OPEC Production Cut: The cartel’s oil production dropped to below 30 million b/d in June, down by 170,000 b/d from May, the lowest monthly output since April 2014, as increased Saudi oil production was insufficient to compensate for declines due to US sanctions on Iran and Venezuela and Russia’s contaminated oil problem. After weeks of deliberations, infighting, global pressure, and media hype, OPEC and Russia confirmed that the oil market still needs support to avoid another steep fall in prices.
Despite lower supplies, of Brent crude has fallen from a six-month high above $75 a barrel in April to below $65 on Friday, pressured by concern about slowing economic growth. “The decision of OPEC+ at the beginning of the week to extend its production cuts has done nothing to change this,” Carsten Fritsch, an analyst at Commerzbank, said of this week’s price decline. “A series of disappointing economic data from the United States, China, and Europe has sparked new concerns about demand.”
The turmoil surrounding last week’s OPEC+ decision has started discussions as to whether the cartel which has ruled oil prices for nearly 60 years is on its way to extinction. The addition of Moscow, which produces some 11 million barrels of oil each day, as a key player in the recent agreement is evidence that OPEC plus Russia is a different beast. Many long-term OPEC members are struggling to export enough oil to keep their countries functioning and are in no position to cut production anymore. The only oil exporters with leeway to modify oil output are the Saudis and the Gulf Arab states, along with those former members of the Soviet Union that still produce oil.
Moscow shows no interest in formally joining OPEC but is talking about a formal agreement with the cartel to keep oil prices from falling too much. Such an arrangement is likely to cement the Riyadh-Moscow alliance as the only decision makers. This would leave the other members voiceless but bound to go along with whatever the “big two” exporters agree is in both their interests. The next step would be for minor exporters to drop out presaging the end of the cartel.
US Shale Oil Production: According to recent forecasts from four energy research firms and the US government, the annual increase in shale oil production is due to fall from 1.5 million b/d in 2018 to 1.3 million in 2019. This slowing in the rate of growth in US shale oil production raises the question of whether we will see peak shale oil production soon, or whether US shale oil production will continue to grow into the 2030s as the EIA forecasts.
Total US oil production hit 12.16 million b/d in April, according to the latest data. US output currently is forecast to be higher than 13 million b/d by the end of the year, and to surpass 14 million sometime in 2020. At least one forecaster is predicting that shale oil production will not peak until 2025 when output is forecast to be over 16 million b/d. Given that the financial and oil industry press has been rife with stories about troubles ahead for the shale oil industry, the question arises as to whether forecasts of a multimillion-barrel increase in production during the next five years are wishful thinking.
It is now conventional wisdom that of the seven large shale oil basins in the US, all but the Permian in West Texas and New Mexico are at, or close to, their all-time peak production. Whether these basins will stay close to their peaks for many years or go into decline in the next few years remains to be seen. For now, all the growth-in-production eggs seem to be in the Permian Basin, which brought 400 new horizontal wells per month online in 2018 and now has some 22,000 wells in production.
There is some room for optimism about growth in the Permian. New pipelines to move the Permian’s gas and oil to export terminals and other markets are due to open shortly and large, well-financed oil companies are taking over a larger share of the Permian’s production. As the financing dries up for the small and middle-sized shale oil drillers, the pace at which these properties fall into stronger hands that have revenue streams from other than selling shale oil may well determine the fate of the industry in the next few years.
2. The Middle East & North Africa
Iran: The new US sanctions have proved more punishing than Iran’s leaders expected, driving them to hit back militarily and breach limits it had agreed to put on its nuclear program. This increasingly confrontational approach aims to raise the costs to the US of its maximum-pressure campaign and to push Western European nations to offer economic relief. Tehran said on Sunday that it is fully prepared to enrich uranium at any level and in any amount, in further defiance of US efforts to squeeze the country with sanctions and force it to renegotiate a 2015 nuclear deal with world powers.
Among the few remaining customers for Iran’s oil is Syria which no longer has access to its domestic oil fields. For several months, Tehran has been sending small tankers through the Suez Canal to the main Syrian oil refinery. This time the Iranians decided to use a supertanker which had to sail around Africa and through the Straits of Gibraltar. As the tanker passed through Gibraltarian waters, it was seized by British Marines on the grounds it was violating EU sanctions against Syria dating from 2011. In response, an Iranian Revolutionary Guards commander threatened to seize a British ship in retaliation. “If Britain does not release the Iranian oil tanker, it is the authorities’ duty to capture a British oil tanker.” Britain should be “scared” about Tehran’s possible retaliation; the Fars semi-official news agency reported an Iranian cleric as saying.
Meanwhile, Germany is working hard to open a special trade channel being set up to enable trade between Iran and European exporters without violating the US sanctions, and the Trump administration is searching for a legal authority it might use to justify an attack on Iran.
These include tying Iran to al-Qaeda, and President Trump’s assertion that it would not involve American ground troops and “wouldn’t last very long.” Democrats and some Republicans have tried repeatedly to pin the administration down, including an unsuccessful attempt to muster 60 Senate votes for an amendment requiring Trump to ask Congress before launching any military engagement.
Iraq: Crude exports in June fell to 3.52 million b/d from 3.57 million in May, according to figures provided by the State Organization for Marketing of Oil. The statistics don’t include the Kurdish region. The June shipments included 3.39 million b/d from Gulf terminals, 105,000 b/d from Kirkuk through the Ceyhan terminal and 25,000 b/d Qayarah oil transported by truck to the southern port of Um Qasr. Halfway through the year, Iraq has sold less oil than anticipated in the federal budget, but higher global prices have helped the government meet its revenue expectations, with just over $40 billion in oil proceeds.
Until recently it was a mystery why ExxonMobil has not gone ahead so far with the Common Seawater Supply Project, as part of the broader $53 billion Southern Iraq Integrated Project. The seawater supply project involving taking water from the Persian Gulf and transporting it to oil production facilities across southern Iraq to boost pressure at key oil reservoirs. This project is critical if Iraq is to reach its next oil output targets of 6.2 million b/d by end-2020 and 9 million by the end of 2023.
Although Baghdad needs a large international oil company to carry out a project of this scale, it seems unwilling to offer sufficient monetary incentives. The risks are too large for the profits the Iraqis are offering. In addition, the problem of endemic corruption across Iraq’s oil industry is well-known by those with any experience in dealing in the country. Given that several companies have paid or are facing significant fines in the US and UK for bribing Iraqi officials, Exxon may be having second thoughts about the risk vs. the rewards of taking on a massive project with the Iraqis.
Libya: The battle for Tripoli took a catastrophic turn last week, plunging the country even deeper into crisis. An airstrike, apparently aimed at an arms depot, hit a nearby detention center for migrants on the outskirts of Tripoli, killing some 55 detainees. To make matters worse, guards at the detention center fired on people seeking to escape the facility. The UN-backed government blamed the United Arab Emirates for the airstrike using an American-made F-16 jet fighter. Saudi Arabia, the UAE, and Egypt support Libyan militia leader Khalifa Haftar, while Turkey supports the UN-backed government in Tripoli. The US has backed the Tripoli government since its creation by a UN-brokered agreement in 2015, but President Trump called Mr. Haftar in April and expressed support for Haftar, creating ambiguity in the US position.
Water is becoming a far more important concern than oil for most Libyans. In western Libya, finding clean water has become difficult because both the power grid and water control systems have been damaged by forces loyal to General Haftar as part of his attack on Tripoli, a city of more than 1 million. A 2,500-mile pipeline system known as the Great Man-Made River was a world-leading civil engineering project when it was built in the 1980s. Some 80 percent of the population of six million live along or near the northern Mediterranean coast and depend on freshwater pumped via its pipelines from vast aquifers further south.
The United Nations has warned all sides that water should not become a weapon of war, but the water system is already severely damaged in western Libya where the capital is located, according to reports by the water authority and the United Nations Children’s Agency. If the damage does not get fixed, there could be a “sudden, unexpected, uncontrollable and unprepared for” shutdown of the water pipeline system, the water authority said in a March presentation to international organizations. “The consequences will be catastrophic, as there is no viable alternative water supply system.”
Libya must remain exempt from any OPEC production cuts, the country’s National Oil Corp quoted its chairman, Mustafa Sanalla, as saying. “Libya has the right to recover production lost through conflict, and the country has lost 25 million barrels of oil this year alone.”
3. China
Representatives of the US and China are organizing a resumption of talks this week to try to resolve a year-long trade war. The talks broke down in May after US officials accused China of pulling back from commitments it had made previously in the text of an agreement that negotiators said was nearly finished. The US accuses China of allowing intellectual property theft and forcing US companies to share their technology with Chinese counterparts to do business in China. It wants China to change its laws on those and other issues. China denies such practices and is reluctant to make sweeping legal changes.
China and the US will face a long road before they can reach a deal to end their bitter trade war, with more fights ahead likely, Chinese state media said after the two countries’ presidents held ice-breaking talks in Japan. Existing US tariffs will have to be removed if there is to be a trade deal between Beijing and Washington, China’s commerce ministry said on Thursday.
China will remove the joint venture requirement for foreign companies wanting to enter its oil and gas industry as it moves to open up a range of sectors per a pledge it made during its trade talks with the US. The Chinese National Development and Reform Commission announced it would remove the joint venture requirement for oil and gas projects along with a rule stating that only local firms can control gas networks in cities with populations of over half a million people. This change in policy opens up a lot of opportunities for foreign companies.
China is completing a 2,000-mile long transmission line that connects the coal-rich Xinjiang province in western China to Anhui province in the country’s east. Once completed, the transmission line is expected to reduce coal use inn Eastern China by about 30 million tons per year. About 66 billion kWh of electricity a year will be transmitted to east China with a voltage of 1,100 KV upon completion, Xinhua reported. “Demand for thermal coal from coal-fired power plants in east China will fall further,” a China-based trader said. Once operational in another six to 12 months, the line will not only affect the demand for imported thermal coal but also pressure domestic coal prices, the coal-analyst added.
This project is part of a government plan to move the combustion of coal far from the eastern cities where it has been making the air unbreathable. It will reduce the need for expensive imported coal along the coast but will do nothing to reduce China’s carbon emissions as there will be considerable line losses in moving so much electricity 2000 miles.
4. Russia
Oil production in June fell by more than the amount agreed in a global deal to cut output, the energy minister and industry sources said last week, as the sector still felt the impact of a contaminated crude crisis that crippled exports. Russian Energy Minister Alexander Novak said that Russian oil output last month fell by 278,000 b/d from an October 2018 baseline of 11.41 million. Under a deal reached with OPEC and other oil producers, Russia had agreed to reduce output by 228,000 b/d from the October 2018 baseline. Production has been constrained by the crisis over contaminated oil, which led to the suspension of exports via its Druzhba pipeline that feeds oil to export routes that supply the Baltic port of Ust-Luga, central Europe, and Germany. Oil supplies that were halted in April have resumed since.
Russian pipeline monopoly Transneft said last Monday it had fully resumed oil supplies via the Druzhba pipeline. However, the problems resulting from the contaminated oil saga are not over. Just days after Russia said it had fully resumed oil flows to Europe, a Shell oil refinery in Germany halted imports via the pipeline again, saying that slightly higher concentrations of organic chlorine were found in the crude. Poland’s biggest oil refiner PKN Orlen is calculating losses related to tainted Russian oil supplies and will submit its claims within weeks, the chief executive said on Friday. Millions of barrels of contaminated oil are still at sea trying to find customers.
5. Nigeria
The country’s crude oil exports fell by 1.6 million barrels in May, representing a 6.8 percent decline from April, according to figures obtained from the Central Bank of Nigeria. Exports for the month were put at 1.37 million b/d or a total of 42.5 million barrels, as against 1.47 million b/d or 44.1 million recorded in April. Crude oil going for domestic consumption was 0.45 million b/d or 13.5 million barrels in the month.
The never-ending story of corruption resulting from oil wealth continued last week with the court-ordered seizure of $40 million of luxury items, mainly jewelry, belonging to former petroleum resources minister Diezani Alison-Madueke. Among the items seized was a golden iPhone, 419 bangles, 315 rings, and 189 wristwatches. Madueke already had her $37.5 million apartment confiscated in 2017. The new seizures are in connection to a money laundering and bribery case involving former Nigerian President Goodluck Johnathon in the high-profile Malabu oil deal case which has embroiled Shell, Eni, and JPMorgan in legal battles in several countries, as well as a case involving Duke Oil Company and Trafigura.
6. Venezuela
Caracas exported 1.1 million b/d of crude oil and refined oil products in June, up by 26 percent from May, thanks to higher shipments under long-standing oil-for-loan deals with China. According to the oil company’s documents, China accounted for 59 percent of Venezuela’s oil shipments last month, with India and Singapore a distant second and third, with 18 percent and 10 percent, respectively. In May, Venezuela’s oil exports had slumped by 17 percent on the month to 874,500 b/d as the country had shut down almost all of its upgraders. Venezuela had to seriously reshuffle its crude oil and oil products export destinations earlier this year after the US prohibited Venezuelan oil imports to America.
While Venezuela’s oil exports to China averaged 233,000 b/d in February immediately after the US sanctions cut off Venezuelan oil from the US market, those exports nearly tripled to 656,000 b/d in June. The US didn’t import any crude oil from Venezuela last month. Whether Caracas is earning any foreign exchange from these shipments is unknown. Beijing loaned Venezuela many billions of dollars during the last ten years, and this oil may only be paying back the loans in hopes for future assistance. Venezuela will stick to its plan of blending domestic and foreign crude to maintain and even increase oil production and exports in the face of the US sanctions, oil minister Quevedo said on Tuesday. In June, PDVSA began to focus exports on the crude grade preferred by some Asian markets, Merey Heavy, after shipments of other oils and refined products fell in May.
7. Mexico
Pemex plans to pursue an ultra-deepwater project in the Gulf of Mexico despite limited resources and despite recent pledges to avoid riskier endeavors in which it lacks experience. Mexico’s energy regulator, the National Hydrocarbons Commission CNH, has recently approved a plan by Pemex to drill for oil in ultra-deep waters in the Gulf of Mexico, Reuters reported on Wednesday. The CNH filing came just two weeks after Pemex’s chief financial officer, Alberto Velazquez, said the firm would avoid investing in deepwater projects, instead of focusing on areas where it has the experience, including the shallow waters of the Gulf of Mexico and onshore oil fields. According to the drilling and exploration plan approved by CNH, Pemex plans to invest $106 million in four years exploring in the Perdido area, which is a prolific producing basin on the US side of the maritime border. Actual drilling is set for Q2 2021, according to the plan seen by Reuters.
Mexico’s president Andrés Manuel López Obrador won his election in a landslide last year, thanks in large part to his promise to crack down on corruption throughout the Mexican political system and the country’s state-owned oil company Petróleos Mexicanos. López Obrador is proving to be a man of his word, first by cracking down on the rampant fuel theft that has plagued Pemex for years, and now with a sweeping probe of the oil company. This probe has already uncovered a corruption scandal resulting in the arrest of a business executive, the issuance of a warrant for Pemex’s former Chief Executive Officer Emilio Lozoya, and multiple bans from serving in government positions for others involved in corruption.
8. The Briefs (selections from the press – date of article in Peak Oil News is in parentheses – see more here: http://www.news.peak-oil.org)
Natural gas prices in Europe have plummeted thanks to a rising gas export war between Russia and the US, much to the delight of European consumers. European natural gas prices are at a historical low and below the cost of shipping gas from the US to Europe. (7/3)
Russia’s Nord Stream 2 gas link project company has withdrawn its 2017 request for a route through Danish territorial waters in an attempt to speed up the permitting process. The move means the Danish Energy Agency, which is responsible for granting the permit for the 55 Bcm/year link to Germany, must now focus on the two requests for routes through Denmark’s exclusive economic zone. Russia wants to bring Nord Steam 2 online by the end of the year before its transit contract with Ukraine expires. Any delay creates uncertainty about how Russian gas will reach Europe from 2020. (7/1)
In Kazakhstan, more than 40 people were injured in a clash between Kazakh workers and foreign contract workers at Tengiz — the country’s largest producing oil field — on the eastern shore of the Caspian Sea, on Saturday, causing a partial suspension of work on a $37-billion project intended to boost production to 900,000 b/d in 2022 from around 670,000 b/d at present. (7/5)
High sulfur fuel oil premiums in Asia surged to a record on Thursday, one of the first signs of the impact of a shift in global ship fuel rules set to occur in 2020. The surge is a result of a combination of factors, including companies reducing their holdings of high-sulfur fuel oil (HSFO) before lower sulfur mandates for ship fuel go into effect next year. (7/5)
EU transport study: The Joint Research Center, the European Commission’s science and knowledge service, has released a report exploring the future of road transport. The report shows how these massive changes on the horizon caused by automation, connectivity, decarbonization, and sharing, represent an opportunity to move towards a transport system that is more efficient, safer, less polluting and more accessible than the current one centered on private car ownership. (7/1)
The US oil rig count declined by 5 to 788 while the gas rig count increased by 1 to 174, according to GE’s Baker Hughes. The combined oil and gas rig count is still 963 for the week, with oil seeing a 75-rig decrease year on year and gas rigs down 13 since this time last year. (7/6)
Crude exports: Phillips 66’s proposed deepwater oil export terminal off Corpus Christi, Texas, expects to load up to 16 VLCCs a month, joining an already competitive market to move the next wave of US crude exports. The project, called Bluewater Texas Terminals, would have two single-point-mooring buoys able to handle two VLCCs at a time. Crude exports could flow onto the supertankers at a rate of 80,000 b/hour, or up to 1.9 million b/d, during a single-vessel loading. (7/3)
GoM leak is large: Timmy Couvillion’s small marine construction company has been hired by the US Coast Guard for its biggest job in years: containing the longest offshore spill in American history. To prepare for the work, his crew dropped a submersible robot 450 feet below the ocean surface to view the source of the pollution through its cyclops eye. The pictures it sent back were chilling. A hole as wide as a basketball court had opened on the sea floor and thousands of gallons of Louisiana sweet crude gushed through. (7/2)
Gasoline exports from Europe to the US East Coast rose sharply in early July after a fire at a major refinery in Philadelphia left a supply shortage in the densely populated region. Philadelphia Energy Solutions’ (PES) 335,000 b/d oil refining complex, the largest and oldest on the US East Coast, is set to permanently shut down after it was hit by a devastating fire on June 21. (7/4)
Major automakers saw US new-vehicle sales slip in the first half of 2019, which is expected to continue for the remainder of the year as the US auto industry’s run of historic sales tapers off. Rising car prices and higher interest rates dulled demand in the year’s first six months, and many buyers flocked to the used-car lot looking for deals. (7/3)
Sinking profits: Exxon Mobil Corp said on Monday lower natural gas and chemical margins in its second quarter would offset improved crude and refining operations, pointing to flat profits sequentially and down from a year earlier. (7/2)
The Governor of Montana, Steve Bullock, has broken away from the Democrat’s strong pro-climate change stance and threw his support behind the controversial Keystone XL pipeline, with the caveat that it needed to be done right. He asserts that pipelines are less dangerous than moving the oil on rail and roads. (7/2)
Growing exports of US LNG will help prop up domestic natural gas prices despite surging production that has created a years-long glut, according to a report from Moody’s. Analysts at the credit rating agency said global demand for US LNG will not be enough to force US gas prices beyond the agency’s projected range of $2.50/MMBtu to $3.50/MMBtu for the foreseeable future. (7/3)
US natural gas in storage rose 89 Bcf to 2.390 Tcf for the week ended Friday, the EIA said. The build was much more than the 76 Bcf build reported during the corresponding week in 2018 and the five-year average injection of 70 Bcf. As a result, stocks were 11.6%, more than the year-ago level though still 6% less than the five-year average of 2.542 Tcf. (7/4)
West Virginia officials are still hopeful that China Energy will eventually make good on its promise of investing $84 billion in the state’s natural gas and petrochemical industries, despite the ongoing US-China trade dispute, the state’s secretary of commerce said Monday. (7/2)
Another blow to coal: Chubb is set to become the first of the big US insurers to announce a ban on coverage for coal companies. There has been a growing movement in Europe to stop selling insurance to coal-based power plants and coal mines because of the environmental damage they cause. (7/1)
New nuke fuel? While nuclear accidents are extremely rare, they loom large in the public conscience, making nuclear energy a hard sell for many constituents, despite its numerous benefits. As part of the solution to reducing risk, manufacturers such as Westinghouse Electric Company and Framatome are hastening the development of so-called accident-tolerant fuels that are less likely to overheat—and if they do, will produce very little or no hydrogen. (7/5)
Solar angle: Despite all the promise of the technology from concentrating solar power plants, CSP plants have all but faded from existence in the US. Today, roughly 1,815 megawatts of CSP plants are in operation in the US. This number pales in comparison, however, to what is happening with concentrated solar power around the world. Although CSP has relatively stagnant in the US, it is set to make a comeback and is already rebounding globally. Global CSP capacity around the world rose by a considerable 11 percent last year. (7/1)
Alaska heat records coming: In more than 100 years of Anchorage history, weather stations have never recorded a 90-degree reading — until last week. (7/4)
Euro heat records: The heat wave that smothered much of Europe at the end of June helped raise average global temperatures to a record for the month. Global temperatures for June were about 0.2 degrees Fahrenheit, or 0.1 degree Celsius, higher than the previous record for the month, set in 2016. Europe itself was even warmer, about 2 degrees Fahrenheit higher than the 2016 record. During the last week of June temperatures spiked by as much as 18 degrees Fahrenheit above normal across Central and Western Europe. It was 115 degrees in a village in southern France on Friday, the hottest temperature ever recorded in the country. (7/6)
Moody’s on climate: Critics of climate policy often cite the painful costs of regulation. But doing nothing is infinitely more costly. It’s worth noting that this report comes from Moody’s, a credit rating agency, and not an environmental group. (7/4)
Shell on climate: The world needs to get to the point at which it will no longer add to the stock of greenhouse gases and reducing emissions to net zero “is the only way to go,” Shell’s chief executive Ben van Beurden said in a speech. While admitting that the world still needs oil, and will need it still for decades to come, van Beurden said that the supply and the demand side of the energy use should work together to achieve the goals of the Paris Agreement to restrict the rise in global temperatures to well below 2 degrees Celsius. (7/5)
BP on climate: To show the world and shareholders that it is taking climate change seriously, BP—like other oil majors—is investing in low-carbon technologies and businesses. The latest such foray of the UK supermajor into sustainability is a US$30-million investment in an alternative protein producer that has developed a technology to turn natural gas into fish and other animal feed, without compromising the food chain and free from negative environmental impacts…[Ed note: excluding the extraction process]. (7/1)
Peak Oil Review: 1 July 2019
By Tom Whipple, Steve Andrews, originally published by Peak-Oil.org
https://www.resilience.org/stories/2019-07-01/peak-oil-review-1-july-2019/
Quote of the Week
“The shale gas revolution has frankly been an unmitigated disaster for any buy-and-hold investor in the shale gas industry with very few limited exceptions. In fact, I’m not aware of another case of a disruptive technological change that has done so much harm to the industry that created the change. While hundreds of billions of dollars of benefits have accrued to hundreds of millions of people, the amount of shareholder value destruction registers in the hundreds of billions of dollars. The industry is self-destructive.”Steve Schlotterbeck, former CEO of drilling company EQT
Graphic of the Week
1. Oil and the Global Economy
After a week of rampant speculation about what could happen at the G20 summit that would affect oil prices, the announcement on Saturday that the US and China have agreed to keep the current tariffs in place for now and would resume trade negotiations left the situation about where it has been for months. President Putin announced that Russia and its friends would join Saudi Arabia in extending the OPEC production cut for another six to nine months eliminating the drama from the formal OPEC+ meeting that will take place early this week. Oil prices were up a bit for the week settling at $64.74 in London and $58.47 in New York.
The agreement between Washington and Beijing to resume negotiations was about what the markets expected from the G20 summit. The talks had broken down seven weeks ago when the Chinese said that they could not accept some provisions that had been tentatively agreed to in a draft text. President Trump will not impose any new tariffs on China and will backtrack on banning the sale of American equipment to the Chinese telecom giant, Huawei. In May, the US Commerce Department put Huawei on a blacklist that prohibits American companies from selling equipment to Huawei. The ban was a significant blow to Huawei, which relies on chips, software, and other electronic components from the United States. In return, China will resume purchases of US farm products and “other goods.”
Although an end to the US-China trade dispute is nowhere in sight, the G20 announcements suggest that the situation is under control at the minute and that tariffs which could lead to an economic recession are on hold. Likewise, the extension of the OPEC+ agreement until next year should prevent another 1 million b/d of crude being dumped on the market forcing prices down. On Sunday, an editorial in the official China Daily warned while there was now a better likelihood of reaching an agreement, there’s no guarantee there would be one. “Things are still very much up in the air.”
Although the better-known forecasters of oil production continue to talk about US shale oil output climbing by millions of barrels per day in the next couple of years, the evidence continues to accumulate that a large production increase, on top of the impressive gain we’ve seen over the past decade, is unlikely to happen.
US Shale Oil Production: US crude oil output in April rose to a new monthly record of 12.16 million b/d, according to the EIA’s Petroleum Supply Monthly which was released on Friday. This report which is compiled some two months after the most recent month analyzed is usually more accurate and less subject to revision than the weekly estimates or the forecast about how big production will be in the coming month. The agency also increased its estimate for March crude production by 11,000 b/d to 11.92 million. Production in the US Gulf of Mexico rose 77,000 b/d to 1.98 million in April. These numbers suggest that the US raised its onshore production, which is mostly shale oil, by 172,000 b/d in April, which seems to be rather high given that the Drilling Productivity Report for March was estimating only 85,000 for the month. Revisions to these figures may be in order.
There are numerous reports that most shale oil drillers, except perhaps for the major oil companies, are cutting back on opening new wells to mollify their financial backers. It seems unlikely that the shale oil industry will be able to increase production by 83 thousand b/d in June and 70 thousand in July as projected by the EIA.
A recent survey by the Dallas Federal Reserve reveals that oil industry executives are unusually pessimistic about the prospects for the future. A combination of low oil prices, increasing costs, and the lack of investor willingness to fund losing firms suggest that the era of rapid increases in shale oil production may be coming to a close.
The monthly report from the North Dakota government on the status of production in the Bakken shows that output for the six months through April is nearly flat. These numbers suggest that the Bakken along with the Eagle Ford and Niobrara basins may be close to peak production. This development leaves the Permian Basin — and within the basin only the efforts of a handful of large international oil companies — to keep US shale oil production growing in the next few years
2. The Middle East & North Africa
Iran: President Trump imposed “hard-hitting sanctions” on Iran’s Supreme Leader last week leading to an exchange of invective with Tehran calling the President “mentally retarded” and the president threatening to obliterate parts of Iran if it attacked “anything American.” Moreover, Tehran announced that the sanctions on Khamenei mean the end of diplomacy and the negotiations that the White House has been signaling it is ready to begin.
Iranian crude exports have dropped in the first three weeks of June to 300,000 b/d or less after the US tightened the screws on Tehran’s primary source of income. Iran’s June exports are down from about 400,000-500,000 b/d in May as estimated by industry sources and a fraction of the more than 2.5 million b/d that Iran shipped in April 2018, the month before President Trump withdrew the US from the nuclear deal. Iran has exported 5.7 million barrels of crude in the first 24 days of June to the United Arab Emirates, Turkey, Singapore, and Syria, although these may not be the final destinations.
Asia’s crude oil imports from Iran fell in May to the lowest in at least five years after China and India wound down purchases amid US sanctions, while Japan and South Korea halted imports. Total imports from Asia’s top four buyers came to 386,021 b/d of Iranian crude in May, down 78.5 percent from a year ago to the lowest monthly level since the data began to be collected by Reuters in 2014. Imports had hit a 9-month high of 1.62 million b/d just a month earlier as buyers rushed to ship in as much as they could before waivers ended.
Iran is on course to breach a threshold in its nuclear agreement, but President Trump says there was “absolutely no time pressure” on the issue. Other world leaders gathered in Japan continued to express concern about Iran, even as Trump appeared relaxed. Chinese President Xi Jinping said the Gulf region was “standing at a crossroads of war and peace,” calling for calm and restraint and talks to resolve the issue. European Council President Donald Tusk, also at the G20, expressed concern about Iran potentially breaching the pact, saying the European Union would continue to monitor Tehran’s compliance. The escalating crisis has put the United States in the position of demanding its European allies enforce Iranian compliance with an accord Washington itself rejects.
The countries that are still parties to the agreement – European powers Britain, Germany and France plus Russia and China – held urgent talks with Iranian officials on Friday in hopes of persuading Tehran to hold off. Iran’s envoy, Deputy Foreign Minister Abbas Araqchi, said the talks were “a step forward, but it is still not enough and not meeting Iran’s expectations.” The likelihood that Iran could exceed the deal’s limits as soon as the next few days is the next looming worry for European leaders trying to keep confrontation between Washington and Tehran from spiraling out of control. Despite abandoning the deal, Washington has demanded European countries ensure Iran complies with it. Iran says it cannot do so unless the Europeans provide it with some way to receive the deal’s promised economic benefits.
Iraq: Baghdad’s oil ministry reported last month that the country’s May crude production rose to 4.595 million b/d, its highest since January 2017 and more than its quota of 4.512 million b/d. Analysts and independent estimates have put Iraqi production at even higher levels than those reported by the ministry. S&P Global Platts’ latest survey of OPEC output pegged Iraq’s May production at 4.82 million b/d.
Last week Iraqi Oil Minister al-Ghadhban said “Iraq confirms its commitment to the cut agreement. “However, the ministry stays ready to satisfy any growth in global oil demand when the overhang of stocks disappears by maintaining the production capacity and by improving export infrastructure.”
Secretary of State Pompeo urged Iraq’s prime minister to take steps to ensure that Iraq isn’t used as a new staging ground for attacks on the Saudis. The May 14 drone attacks were initially thought to originate from Yemen, where Houthi rebels had claimed credit for causing damage to an important oil pipeline stretching hundreds of miles across Saudi Arabia. But US officials familiar with the intelligence said the attacks had originated in southern Iraq, most likely implicating Iran-backed militias with a strong presence there. Iraqi leaders are questioning the US assessment and have asked the Trump administration for more evidence to support its claims.
Saudi Arabia: Saudi Aramco was busy last week trying to reassure its customers that it has the ability to keep oil shipments flowing no matter what happens in the Gulf. The CEO, Amin Nasser, said in an interview in Seoul on Tuesday, “we can supply through the Red Sea, and we have the necessary pipelines and terminals.” Saudi Arabia is South Korea’s most important source of crude oil.
In reality, Aramco will not be able to keep the necessary crude oil and products volumes flowing to Asian and European markets in the case of a full Strait of Hormuz blockade. Even though Aramco operates a crude oil pipeline with a capacity of 5 million b/d, carrying crude 750 miles between the Arabian Gulf and the Red Sea, much more is needed to keep the oil market stable.
Libya: Forces supporting the UN-recognized Government of National Accord in Libya have seized a town near Tripoli that served as the main supply base for the Libyan National Army (LNA) of General Haftar. The takeover of Gharyan is a severe blow to Haftar’s forces, which are affiliated with the rival eastern government of Libya. Forces allied to the Tripoli government, backed by air strikes, stormed the town, some 90 km (56 miles) south of Tripoli, in a surprise attack, witnesses said. They took the central operations room of the LNA, which by evening had left the town, they added. Gharyan is also home to field hospitals, and a helicopter base located there.
“This is a game changer,” said Tarek Megerisi, a policy fellow with the North Africa and Middle East program at the European Council on Foreign Relations. “If Haftar can’t retake Gharyan quickly. Tarhouna and the remaining LNA units will be more isolated, under-resourced, and with lower morale,” he said.
Following the taking of Gharyan, Libyan government fighters discovered a cache of American missiles, usually sold only to close American allies, at the captured rebel base. Markings on the four Javelin anti-tank missiles’ shipping containers indicate that they were sold to the United Arab Emirates in 2008.
Even if General Haftar’s LNA is forced to withdraw from its attempt to seize Tripoli, it still has the ability to disrupt much of Libya’s 1 million b/d of oil production.
3. China
Beijing’s booming economy has had the undesired side-effect of increasing China’s dependence on foreign oil imports. Twenty-five years ago, China produced approximately 4 million b/d, which was enough to satisfy the country’s domestic demand for petroleum products. In April 10.64 million b/d were imported, which is a new record. In 2018, the share of imported oil reached 70 percent and is expected to grow.
Even though Russia became China’s largest crude supplier, pumping in some 1.48 million b/d via pipeline, Beijing is still vulnerable to upheavals abroad. It has already lost a share of its traditional oil supply due to the US sanctions on Iran and Venezuela. Should hostilities in the Middle East slow or halt much of the region’s exports, China’s economy would be in trouble.
This ever-increasing reliance on foreign oil has become especially worrying for Beijing in the past year due to the escalating trade war with the US. To at least slow this dependency, President Xi has called on Chinese energy companies to increase domestic production. While China would love to replicate the American shale boom, they face a different situation. Shale formations in China differ from the ones in the US because the oil and gas deposits are located much deeper and are less concentrated, which makes extraction more difficult and expensive. They also lack the technical expertise required to frack horizontal wells and, so far, have made little progress in extracting shale oil.
Beijing’s only choice is to try to get more oil from its existing oil fields by using expensive secondary recovery techniques to extract more oil. In the next five years China’s “big three,” PetroChina, Cnooc, and Sinopec, aim to increase spending by $77 billion on oil fields that are mature and require high costs to raise production. Skeptics are already questioning the policy of spending so much capital on mature oil fields. According to a researcher at the China National Petroleum Corp., the additional spending will only increase production to 200 million tons by 2022, which is not a significant gain.
4. Russia
The two-month-old contaminated oil saga continued to play out last week. Moscow says the problem is over, but some of its customers are still unhappy. To clear the contaminated oil from the Druzhba pipeline, oil traders loaded a dozen tankers with contaminated crude and sent them off in search of customers who would buy the bad oil at a discount and mix in with enough clean oil so that it could be refined. This plan has not worked out so well, and more than 7 million barrels worth around $500 million remains homeless, zigzagging between Europe and Asia.
In China, buyers have refused to take dirty Russian oil, forcing trader Vitol to send a cargo back to Europe. “I’m not willing to risk our equipment just for cheap crude,” said an oil trader with a North Asian refinery. Buyers have also paid millions of dollars in demurrage charges as tankers are stuck with the dirty oil, preventing ship-owners from sending them on new voyages. Russia has promised to compensate buyers after they file claims post-sale. “The problem is that this oil is often impossible to sell. So how can I file a claim?” a Russian oil buyer said.
Elsewhere on the pipeline, Czech oil refiner Unipetrol stopped taking oil from the Druzhba pipeline due to chloride contamination detected at the Ukraine-Slovakia border. Oil flows to Poland through the Druzhba pipeline resumed on Thursday after being suspended on Wednesday evening due to the discovery of contaminated oil. It has been a hard year for Russian oil exports, and the whole debacle will likely cost Moscow billions of dollars in lost production and reparations.
5. Mexico
Pemex reported another decline in its crude oil production in May, which was partially offset by a modest uptick in condensates, natural gas liquids and gas output. The company produced 1.68 million b/d of crude, down just a fraction of one percent from production of 1.69 million b/d in April.
Mexico’s new president, López Obrador, has been a critic of the energy reform of his predecessor Enrique Peña Nieto, who opened Mexico’s oil and gas sector in 2013 to private investment for the first time in seven decades. Six months into office, the populist left-wing president now blasts the energy reform as “a failure” and vows not to call new bidding rounds for foreign oil companies for oil exploration and production in Mexico unless those companies show results.
López Obrador wants a greater role for Pemex in reversing the downward trend in Mexican oil production and is criticizing the foreign oil firms for failing to do so. He is ignoring the fact that lead times between awarding contracts for finding oil are measured in years, not months.
After allocating a $1.5 billion stimulus package to the company earlier this year, Lopez Obrador has declared his intention to see Pemex increase its oil production to 2.4 million b/d and its gas production to 6.5 billion cf/d by 2024. However, the cancellation of recent joint-venture auctions for Pemex by Mexico’s Comision Nacional de Hidrocarburos (CNH) has raised concerns about the government’s new strategy for the company. Earlier this month, the commission announced the cancellation of a farmout previously scheduled for October of seven inland production areas where oil and gas production has lapsed in recent years. The commission’s latest joint venture cancellation drew criticism from some of its members who have argued that the government’s production goals for Pemex would be unachievable without private investment.
President López Obrador said on Thursday that the natural gas pipeline contracts that the previous administration had signed were ‘abusive’ and ‘unfair’ to the Mexican state, raising additional concerns whether the new administration will respect previously signed energy deals. Delayed startup of the Sur de Texas-Tuxpan pipeline could continue indefinitely amid possible arbitration proceedings, and already appears to be impacting South Texas natural gas supply. Over the past several months, supply likely contracted by the state-owned Mexican power generator to feed the delayed pipeline has overwhelmed the region, depressing prices and filling regional storage inventories. In June, prices at hubs in south and east Texas are down sharply compared to last year.
6. The Briefs (selections from the press – date of article in Peak Oil News is in parentheses – see more here: http://www.news.peak-oil.org)
In Turkey, state upstream operator TPAO will start drilling for gas east of Cyprus in early July, within the Exclusive Economic Zone (EEZ) claimed by the Republic of Cyprus. TPAO’s drillship has been anchored off Turkey since Monday; the vessel will depart “in a few days” for its planned drill site. (6/28)
Somalia prospects? Royal Dutch Shell and Exxon Mobil are looking to re-enter the market in Somalia ahead of an oil block bid round taking place later this year. Shell and Exxon Mobil had a joint venture there prior to the toppling of dictator Mohamed Siad Barre in the early 1990s. Somalia has been mired in insecurity since Barre. The country currently does not produce any oil but production could transform the economy as early stage seismic data has shown there could be significant oil reserves. (6/28)
In Brazil, Petrobras plans to increase oil exports from 600,000 b/d on average in the first half of 2019 to more than 800,000 b/d, thanks to increasing production from their off-shore pre-salt oil plays. (6/29)
Argentina’s ambitious drive to emulate the US shale boom is moving ahead after the country delivered its first-ever exports of light crude oil and liquefied natural gas from its massive Vaca Muerta shale deposit in Patagonia earlier this month. Two private-equity firms – the UK’s Riverstone and Argentina’s Southern Cross Group – unveiled plans on Thursday to invest $160 million in a 78.4 percent stake in the first exclusively midstream company to operate in the Vaca Muerta, or “Dead Cow”, rock formation. A gradual rise in exports is expected, with Argentina’s light oil shipments forecast to reach 70,000 b/d next year. (6/28)
Vaca Muerta #2: After years of drilling and development and billions of US dollars of investment, Argentina’s vast shale play Vaca Muerta has finally seen the first tangible results with the first exports of light crude oil and liquefied natural gas (LNG) from the resource-rich formation. Apart from Argentina’s oil and gas group YPF, international oil and gas majors including Exxon, Chevron, Shell, and Total hold acreage positions in Vaca Muerta and have recently announced plans to proceed with major development projects in the most promising shale oil and gas basin outside the United States. Higher costs, regulatory uncertainty, and insufficient infrastructure have so far hampered a U.S.-style shale revolution in Argentina. (6/27)
The US oil rig count increased by four to 793, while the gas rig count decreased by four to 173, according to GE’s Baker Hughes. The combined oil and gas rig count is still 967 for the week, with oil seeing a 65-rig decrease year on year and gas rigs down 14 since this time last year. (6/29)
Water handling: In the Permian Basin alone, the combination of saltwater from wells and water used in the fracking process is expected to be three times larger than crude output by 2023, according to Jefferies Group. Pipeline owners already are adept at transporting oil and gas, so adding water handling to their portfolios may be a logical next step for them. (6/26)
Refinery fire: Philadelphia Energy Solutions will seek to permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex. Shutting the refinery, the largest and oldest on the US East Coast, will cost hundreds of jobs and squeeze gasoline supplies in the busiest, most densely populated corridor of the United States. (6/27)
East coast fill-in: US East Coast ports can expect more cargoes like the one aboard the Maersk Cancun once Philadelphia Energy Solutions refinery shuts. The tanker delivered 296,000 barrels of reformulated gasoline from the Netherlands to New Jersey last Thursday, on the eve of the fire that sealed the fate of the plant. Suppliers in Canada, Europe and the US Gulf Coast are likely to pick up most of the slack. (6/28)
Shale gas $$ bust: Reported spending outweighed income for a group of 29 large public shale gas companies by $6.7 billion in 2018, bringing the group’s 2010 to 2018 cash flow to a total of negative $181 billion, according to a March 2019 report by the Institute for Energy Economics and Financial Analysis. (6/25)
Oil Leak: A new federal study has found that a leak in the Gulf of Mexico that began 14 years ago has been releasing as much as 4,500 gallons a day, not three or four gallons a day as the rig owner has claimed. The leak, about 12 miles off the Louisiana coast, began in 2004 when a Taylor Energy Company oil platform sank during Hurricane Ivan and a bundle of undersea pipes ruptured. Taylor Energy, which sold its assets in 2008, is fighting a federal order to stop the leak. (6/26)
Green New Deal pricey: Eliminating fossil fuels from the US power sector, a key goal of the “Green New Deal” backed by many Democratic presidential candidates, would cost $4.7 trillion and pose massive economic and social challenges, according to a report released on Thursday by energy research firm Wood Mackenzie. (6/27)
The US state of Michigan has filed a lawsuit asking for an Enbridge Inc oil pipeline that runs under the Straits of Mackinac in the Great Lakes to be decommissioned, Michigan’s attorney general said on Thursday. The Line 5 oil pipeline ships 540,000 b/d of light crude oil and propane and is a critical part of Enbridge’s Mainline network, which delivers the bulk of Canadian crude exports to the United States. Potential disruption to Line 5 adds to the Canadian oil sector’s worries about transporting crude. (6/28)
Harris County in Texas plans to sue Valero Energy Corp for pollution from its Houston refinery. In recent years, environmental groups like the Sierra Club and Environment Texas have filed citizen lawsuits against refineries and chemical plants, but it is rare for governments to do so. (6/29)
Boulder County, Colorado halted accepting new oil and gas drilling and seismic testing permits for nine months, the latest community in the state to enact measures aimed at curbing oil and gas production. Colorado is the fifth largest oil producing state. This year Colorado lawmakers passed Senate Bill 19-181, tightening regulations on the state’s oil and gas industry. (6/29)
Another bankruptcy: Oilfield services firm Weatherford International on Friday filed a prepackaged restructuring plan with the US Securities and Exchange Commission, according to a regulatory filing. The proposed restructuring will reduce the firm’s funded debt from roughly $8.35 billion to $2.5 billion. (6/29
EU’s EV growth: Registrations of pure electric, plug-in hybrid and hybrid cars totaled 94,000 units in 18 European markets in May 2019, counting for 7.1 percent of the total volume, up from 5.3 percent in May 2018, according to figures from JATO Dynamics. The majority of registrations came from hybrid vehicles, but the growth was driven by pure electric cars, where registrations jumped from 12,300 units in May 2018 to 22,300 (+81 percent) last month. (6/25)
France registered its highest temperature—45.9 deg C (114.6 deg. F)—on record. Twelve towns in southern France saw new all-time highs on Friday and three experienced temperatures above 45 degrees, it said. The World Meteorological Organization said 2019 was on track to be among the world’s hottest years, and that 2015-2019 would then be the hottest five-year period on record. (6/29)
Britain’s new target to reach net zero greenhouse gas emissions by 2050 became law on Thursday, making it the first among the major G7 countries to set such a goal. Outgoing Prime Minister Theresa May had announced the target earlier this month, saying the plans were ambitious but crucial for protecting the planet for future generations. (6/27)
Population tracking: Since the days of Thomas Malthus, we’ve worried that overpopulation is about to overwhelm our planet. Those fears haven’t gone away. A further two billion people will be added to the current world population of 7.7 billion by 2050, the UN Population Division said in a report this week. Numbers will still be rising as the total approaches 11 billion people in 2100, according to the UN’s central forecast. At the same time, signs are starting to emerge that this picture may be too pessimistic. Malthus’s key error was his failure to foresee how fertility rates would fall with increasing incomes – and the pace of change on that front has been staggering in recent years. (6/25)
The Permian Boom Is On Its Last Leg
By Robert Rapier - Jul 28, 2019, 12:00 PM CDT
https://oilprice.com/Energy/Energy-General/The-Permian-Boom-Is-On-Its-Last-Leg.html?fbclid=IwAR27m42Zd93qIsXiG-qR6Y8KhrYpKDa8Y2AWdFfY4dn3h5XUzaMjuLAzw5w#
Demand for sand: the largest mining industry no one talks about
05/23/2019
by Lucienne Cross
https://inhabitat.com/demand-for-sand-the-largest-mining-industry-no-one-talks-about/?fbclid=IwAR22cffxq4jdKt8GTZyLi6yR-lgGldMnqZU1xao2hW72DXIZbLmxxYWv2HQ
Peak Oil Review 1 April 2019
By Tom Whipple, Steve Andrews, originally published by Peak-Oil.org
April 1, 2019
https://www.resilience.org/stories/2019-04-01/peak-oil-review-1-april-2019/
Quote of the Week
“In just a little more than a year, Mexico’s net oil exports fell from 314,000 barrels per day to net imports of 90,000 barrels per day in December 2018…I find it strange that this has not yet been mentioned in the news as it is a very critical factor for the future of Mexico.” Steve St. Angelo, oil industry commentator
Graphic of the Week
World demand growth for key materials vs. GDP and population growth
1. Oil and the Global Economy
Prices have climbed steadily for the last three months closing on Friday above $60 a barrel in New York and $67 in London. The combination of slowing US shale oil drilling and the Venezuela, Iran, and the OPEC+ situations continue to outweigh the bad economic news that may someday lower demand. The situation in Venezuela gets worse every day, and it seems likely that the country will see a significant drop in production and exports during March.
On Friday, the EIA reported that the average daily US crude production slipped during January for the first time in nearly six months falling to 11.871 million b/d from 11.961 in December. This number is likely to be more accurate than the weekly estimates that are based more on trends than actual production numbers. Given the severe weather across North Dakota during the last two months, it seems unlikely there will be an increase in Bakken production until spring.
The US oil rig count continues to slide, falling from 885 on January 1st to 816 last week. This situation suggests that we may not see another 1.8 million b/d gain in shale oil production like happened in 2018 despite all the hype about the smarter and wealthier international oil companies taking over the Permian Basin from smaller, less efficient, drillers.
U.S. and Brent crude oil futures touched a new high for the year this week. While the price increase is underpinned by the fundamentals of the oil market, optimism is increasing that a settlement of the US-China trade dispute is in the offing and that the prospects for a recession later this year are receding.
It should be noted, however, that along with higher crude prices, US gasoline prices have been increasing at a steady pace – up 28 cents a gallon in the last month. Prices on the US West Coast are already over $3 a gallon and Michigan, Illinois and Pennsylvania are in the vicinity of $2.80. While nobody is forecasting a return to $4 a gallon gasoline in the US in the immediate future, California is already at $3.61 for regular and is approaching the point where discretionary driving starts to slow.
The OPEC Production Cut: Saudi Arabia is having a hard time convincing Russia to stay much longer in an OPEC+ pact cutting oil supply, and Moscow may agree only to a three-month extension. Russian Energy Minister Novak told the Saudis last month that he is under pressure to end the cuts but would agree to extend the cuts to the end of September. Moscow has always been skeptical of the cuts, given that the collapse of Venezuela amounts to nearly the same thing without harming the major oil exporters. Last November, Russia agreed to go along with the deal but warned that it would not be able to cut 50,000-60,000 b/d until spring. This situation left the Saudis and the other Gulf Arabs to shoulder the bulk of the cut.
In the meantime, President Trump, worried about the price of gasoline during next year’s presidential election, is calling for higher OPEC production.
US Shale Oil Production: The International Energy Agency recently forecast that a “second” shale revolution was on the horizon. The next wave would drive US oil output to “19.6 million b/d by 2024 up from 15.5 million b/d in 2018,” and higher crude exports are expected. The forecast was published just before the CERA Week 2019 conference last month and caused “ecstatic dialogues about the viability and future direction of the industry. US production is expected to account for 70% of the total increase in global output capacity by 2024, while total exports of crude and refined products should reach 9 million bpd, surpassing rivals Russia and Saudi Arabia.
The Agency probably made this optimistic forecast based on the growth of US shale oil production in recent years without giving much concern to recent developments or the economics of shale oil. There is increasing evidence that the financers of the 10-year-old shale oil boom are becoming tired of the billions of dollars that they have lost as for most producers it still costs more to find and extract shale oil than the product selling price. Although there have been “efficiencies” in producing shale oil in recent years, a large number of drillers are still losing money even with oil now selling for $60 a barrel.
The next issue is whether there is enough oil left to extract at affordable prices. This issue seems to be focusing on the Permian Basin as the other shale basins have not been growing rapidly in the last two years despite all sorts of expensive “new technology” and procedures being applied. As some of these are rather new ways of extracting oil, we will not know for a couple of years whether they increase the amount of oil ultimately recovered from a given well or just extract it faster. Some geologists who have looked closely at the Permian doubt that the large amount of oil that the Geologic Survey says can be found in the basin will ever be produced economically.
The last issue is the growing presence of the international oil companies in the Permian Basin. These companies have very large cash flows and can even afford to produce shale oil from the Permian at a loss provided they can make up the difference between the well and the retail gas pump. If there is oil that can be produced economically in the Permian Basin even by the international oil company standards, then production there might be able to grow. If the affordable oil is not there, then there may not be much of a “second” shale oil revolution in the immediate future.
Last week two South Korean refiners canceled the delivery of U.S crude oil cargoes saying they were concerned about the quality of the crude. There is a massive pipeline network carrying crude oil from US shale oil fields to the Gulf Coast ports. While passing through many pipelines, oil can get contaminated with oil residue, heavy metals, pipe cleaning agents, and a group of compounds called oxygenates. The latter can be especially troublesome to refiners. If contamination of US shale oil proves to be endemic, we could see demand drop.
2. The Middle East & North Africa
Iran: Renewal of the US sanctions waivers which affect Iranian sales to India, China, South Korea, Taiwan, and Japan is the subject of much debate in Washington. The National Security Council staff does not want to extend the waivers, while the State Department believes such an action would do more harm than good. Iran’s exports seem to be down by about a million b/d since before the sanctions were announced and some believe that as much as another million b/d could be cut from Tehran’s exports if its major customers stop all imports. Japanese refineries have already halted imports of Iranian oil after buying 15.3 million barrels between January and March in anticipation that the US sanction waiver will not be renewed.
Over the years, Iran has become expert in evading US sanctions though what Washington describes as a vast network operating in Turkey and the UAE which helps the Iranians to continue exporting oil and receiving payments. Among the techniques Tehran uses is transferring oil at sea from Iranian tankers to those of foreign registration and issuing forged export certificates attesting that the cargoes originated in Iraq.
Torrential rains have plagued Iran in the last few weeks with 26 of 31 provinces issuing flood threats. Particularly hard hit was Khuzestan Province which produces some 70 percent of Iran’s oil and almost all of its natural gas.
The loss of revenue from the sanctions is starting to have an impact on Iran’s foreign policy. Projects Iran promised to help Syria’s ailing economy have been postponed. The Trump administration says the strains show that the sanctions are effective. However, other observers doubt constrained oil sales will ever have much effect on passions loose in the Middle East.
Iraq: Iraq’s total oil production fell by about 70,000 b/d in February as the government began cutting output to comply with the OPEC+ agreement. The federal government and the KRG together produced some 4.83 million b/d, down from an estimated 4.90 million b/d in January.
Security forces at the Alaas field in northern Iraq have thwarted an attack by Islamic State militants, killing and injuring several attackers. This attack is the latest by the terrorist group on the same oil field after it was driven out of the area in 2017. While Baghdad celebrated the defeat of Islamic State after the battle for Mosul, some military experts warned that not all militants were destroyed in the push and that the group will sooner or later resurface.
Saudi Arabia: An underfunded budget is forcing the Saudis to push for oil prices of at least $70 per barrel this year, even though US shale oil producers could benefit, and Riyadh’s share of global crude markets might be further eroded. Riyadh cut exports to its primary customers in March and April despite refiners asking for more of its oil. The move defies President Trump’s demands that OPEC help to reduce prices while he toughens sanctions on oil producers Iran and Venezuela.
The long-awaited Saudi Aramco acquisition of Saudi Basic Industries Corporation (SABIC) took place last week. Aramco has acquired a 70 percent stake in SABIC, with an estimated value of $69.1 billion. The deal would join Saudi Arabia’s two largest companies and give the Saudi sovereign-wealth fund, SABIC’s current owner, roughly the same amount of money it had expected from an initial public offering for Aramco. This money will supply part of the capital that Prince Mohammed needs to diversify the Saudi economy. Saudi Aramco plans to issue a $10 billion bond this week start the funding of the SABIC purchase. The bond would be the first-ever debt issuance by the Saudi Arabian Oil Co.
US Energy Secretary Perry has approved six secret authorizations by companies to sell nuclear power technology and assistance to Saudi Arabia. The Trump administration has quietly pursued a deal to sharing US nuclear power technology with the Saudis, who plan to build at least two nuclear power plants. Several countries including the United States, South Korea, and Russia are competing for that deal, and the winners are expected to be announced later this year.
Libya: Oil workers at Sharara oilfield, which recently re-opened after a three-month occupation by militant workers, have demanded a salary increase of 67 percent as they try to return oil production at the field to its normal 315,000 b/d production.
3. China
Profits at large Chinese industrial companies fell at the fastest pace in almost a decade in the first two months of 2019 in the latest sign of a slowdown for the Chinese economy. Industrial profits fell 14 percent year-on-year, figures from the National Bureau of Statistics showed, the largest drop recorded since May 2009. Earnings in the auto industry tumbled 42 percent year-on-year for January and February.
Uncertainty caused by the US-China trade war, as well as a government crackdown on China’s high levels of corporate debt, led the country’s economic growth to fall to its slowest annual rate in almost three decades in 2018. The fall in industrial profits comes despite a series of fiscal and monetary stimulus measures put in place since July to shore up growth. The possibility that China’s economy is headed for a steep downturn is a significant factor in keeping a lid on oil prices.
China’s largest state-run oil majors, China Petroleum & Chemical (SINOPEC), China National Petroleum Corporation (CNPC), and China National Offshore Oil Corporation (CNOOC) have announced plans to spend billions in the next few years to increase oil output. Many observers are saying this effort will be a massive waste of money as China has few opportunities to open new oil fields and that increases in capital expenditures attempting to rejuvenate aging oil fields is unlikely to pay off.
According to data published by China’s National Bureau of Statistics, Chinese mines produced 3.55 billion tons of coal last year, a 5.2 percent increase as compared to 2017. The bureau also reported that in 2018 the country generated a total of 4.979 trillion kilowatt-hours of electricity from coal-fired power plants, 6 percent higher than the same measure in 2017. Moreover, data released by the Chinese energy bureau last week shows that the country added 194 million tons of coal mining capacity during 2018. This increase in production capacity is in direct contrast with China’s widely publicized promises to reduce their dependence on fossil fuels, especially dirty coal, as well as specific avowals to do away with excess mining capacity.
For a while, things were looking up: emissions decreased, although very slightly, from 2014 through 2016, and coal emissions, in particular, went down. But now that progress appears to be in reverse. China’s inventory of coal plants averages 12 years old with a total lifespan of 40 years. Unless something changes, we can expect growing emissions from China.
4. Nigeria
Bayelsa State Governor, Mr. Dickson recently lamented the environmental damage in the Niger Delta. He said the region suffers from some 335,000 barrels of oil spills annually, worth about $20 million, as against only 35,000 barrels in the United States. Bayelsa accounts for forty percent of Nigeria’s oil wealth and hosts the operations of all the major multinational oil companies. Whether these numbers are anywhere near accurate is difficult to say as the government suppresses details of oil spills. While some of the leaks are likely due to inadequate maintenance and are the fault of the oil companies, most seem to be due to thieves drilling into oil lines to steal oil and gasoline, and militants blowing up pipelines and other facilities for political ends.
Numerous studies have shown that oil leaks extract a significant toll on the residents of the oil-producing regions. A 2011 United Nations Environment report disclosed that life expectancy in the Niger Delta is around ten years lower than the national average.
5. Venezuela
The situation continues to deteriorate, and last week saw the second and then a third significant blackout. The second closed down the country’s primary oil export terminal for three days. Exports did not take place for at least seven days during March which is likely to result in a significant drop in export levels from the 920,000 b/d that were exported in January. The four oil upgrading facilities in the Orinoco Belt, which can process some 700,000 b/d of very heavy Orinoco crude for shipment, were shut down for a second time.
The Petropiar upgrader, partly-owned by Chevron, and the Petromonagas facility, in which Rosneft has a minority stake, never regained full capacity after the March 7 blackout. The other two upgraders, Petrocedeno, partly-owned by Total and Equinor, and Petrosanfelix, which is fully-owned by PDVSA, halted operations after the power outage on Monday. There is no word on the current status of these facilities but should the outages last much longer Venezuela is going to be exporting very little oil in the weeks ahead.
The Venezuelan electrical grid has become so unstable that periodic power shortages are expected to continue indefinitely.
There was little political movement in the country last week. Moscow flew in two planeloads of what are thought to be troops. These soldiers could be a deterrent against a US invasion or simply be providing added security for President Maduro in the wake of threats to oust his government.
President Maduro decided to allow international aid from the Red Cross into the country, his first admission that Venezuela is suffering from an economic collapse. At a news conference in Caracas on Friday, Francesco Rocca, president of the International Federation of Red Cross and Red Crescent Societies, said the agency had received permission to start relief efforts from both the government and the opposition. The government didn’t comment on the announcement from Mr. Rocca, who said the agency would begin delivering medical supplies within 15 days to benefit some 650,000 people. The population of Venezuela currently is 31.3 million, most of whom are near starvation or at least very hungry.
To make matters worse, the US has instructed oil trading houses and refiners around the world to cut dealings with Venezuela further or face sanctions themselves, even if the trades are not prohibited by published US sanctions. Moreover, President Trump is considering imposing sanctions on companies from other countries that do business with Venezuela.
6. The Briefs (selections rom the press – date of article in Peak Oil News is in parentheses – see more here: news.peak-oil.org)
World fleet MPG gains slowing: The improvement in fuel economy of cars and other light-duty vehicles around the world has slowed down in recent years. After improving by an average of 1.7% per year for more than a decade, fuel economy gained just 0.2% a year in advanced economies between 2015 and 2017. Twenty-seven countries, including Sweden, Canada and the United Kingdom, saw their fleet fuel economy stagnate or worsen.
European primary gas demand fell 1.9% to 599 Bcm in 2018, while renewable power generation grew 8.5% to 1,462 TWh, the IEA said in a report Tuesday. The figures reveal how renewables are displacing both coal and gas in European power generation, in contrast to the US and China, where gas demand climbed sharply on coal-to-gas switching. (3/26)
The European Parliament has approved EU emission performance standards for new cars and vans by 2030, intended to cut oil use in road transport and promote electric vehicles. The standards require new cars to emit 37.5% less CO2 on average and new vans 31% less CO2 on average compared with 2021 and reflect the EU’s increasing efforts to cut both its oil imports and transport emissions. The cuts are above the 30% the European Commission originally proposed November 2017 for both new cars and new vans. (3/28)
Egyptian LNG: After more than a decade of uncertainty for Egypt’s natural gas sector, leading even to importing LNG for years, Cairo is heading to a much brighter gas future. Two weeks ago, Egypt re-joined the ranks of global LNG exporters when its state gas company EGAS tendered to sell four cargoes of LNG for loading in April from the Idku liquefaction plant on the Mediterranean coast. (3/28)
In Algeria, protesters are demanding the resignation of President Bouteflika. Estimates say crowds in the capital, Algiers, reached a million. It is the sixth successive Friday of mass anti-government protests in the country. (3/30)
Pickups for China: While China may be the world’s largest market for electric vehicle sales, Chinese car buyers have a new love affair: pickup trucks. As in the U.S., pickups are ideal for construction, farm, and maintenance companies — but consumers find them very appealing for the horsepower and cargo capacity. The world’s largest new vehicle sales market saw its numbers fall for the first time last year since the 1990s, but pickups sales grew 10 percent to about 452,000 units sold during that time. (3/28)
South America vehicular fuels: Meeting in Brazil this week, auto executives from Toyota to GM talked up traditional fuel sources like ethanol, natural gas, and diesel, underlining how South America’s protected auto market is likely to resist a broader global move toward electric vehicles for years to come. (3/27)
Mexico net oil importer: For the first time in more than 50 years, and according to multiple data sources, Mexico has become a net importer of oil, in part due to overreliance on its legacy super-giant field Canterell. This is undoubtedly bad news for the Mexican government as it has relied upon its oil revenues to fund a large percentage of its public spending. (3/30)
The Mexican subsidiary of US railroad operator Kansas City Southern expects its gasoline transport business to grow at least 15 percent by volume this year, and possibly much more, a senior executive said on Tuesday. Jose Zozaya, president of the Mexican unit, said the railway is being approached by new fuel importers, beyond existing clients that already supply their own retail gas stations in Mexico like U.S.-based ExxonMobil Corp and France’s Total SA. (3/27)
In Canada, two years after an M&A boom driven by the exit of several oil majors from the oil sands, sellers of oil and gas assets are having trouble finding buyers. With persistent uncertainty about the future of Alberta’s crude oil pipeline network, sluggish capital markets, and high debt levels among potential buyers, the apparent shunning is only to be expected. The pipeline problem seems to be the biggest. (3/28)
Keystone pipeline: President Donald Trump signed a permit on Friday granting permission for TransCanada Corp to build the long-delayed Keystone pipeline at the U.S.-Canada border for the importation of oil from Canada. The $8 billion pipeline, which would carry 800,000 barrels per day of oil from Canada’s oil sands to refineries along the US Gulf of Mexico, has been held up in US courts. But the hotly contested pipeline expansion, meant to carry oil from Alberta to Nebraska, still faces hurdles more than a decade after it was first proposed, including a state-level challenge that could complicate its completion. (3/30)
The US oil rig count fell by 8 to reach 816 while gas rigs declined by 2 to reach 190, according to the Baker Hughes weekly report. The total number of active oil and gas drilling rigs fell by 10 rigs to 1,006, up just 13 from last year’s total. Compared to last year at this time, oil rigs are up 19 while gas rigs are down four. (3/30)
Oil exports: The US Gulf Coast is set to become a net crude oil exporting region for the first time on a quarterly basis, signaling a shift in global oil flows that has been in the making for a while. While there was one VLCC loading at a Gulf Coast port every six days in 2017, last year this rose to almost four VLCCs every six days. During the first 11 weeks of 2019, the total number of VLCCs loading at the Gulf Coast increased to five per week, with the average daily amount of crude flowing out of the US at 3.6 million barrels. Most of this is going to Asia. (3/28)
Citgo Petroleum, the U.S.-based unit of Venezuelan state-run oil firm PDVSA, said on Thursday it raised $1.2 billion through a five-year term loan to cover operating expenses and to refinance existing debt. Citgo said it settled a $320 million accounts receivable securitization facility and a $900 million revolving credit line. The financing would help Citgo fund its operations following US sanctions and its split from the parent company. (3/29)
In Houston’s Ship Channel, the US Coast Guard is working to set up a “locking system” in areas where water was contaminated with significant amounts of benzene after a fire at the Intercontinental Terminals Co. tank farm and begin allowing ships out of Carpenters Bayou, the Old River and Jacinto Port. (3/30)
Colorado’s coming drilling restrictions: Colorado’s state legislature is one step away from stiffening drilling regulations after years of conflict. While a ballot initiative to tighten drilling regulations was defeated during last November’s election by a well-funded industry campaign, the new Democratic majorities in the state legislatures are poised to pass legislation that expand existing limits on drilling. Going forward, the state’s oil and gas commission will likely be forced to put more emphasis on health and safety issues such as proximity of drilling rigs to occupied structures. (3/30)
Alaska pipeline progress: Technical teams from the Alaska Gasline Development Corp. (AGDC) and supermajors BP and ExxonMobil will meet next week in Houston to begin a review of the proposed $43 billion Alaska LNG project in an effort to find potential cost reductions so the massive capex project can move forward, Tim Fitzpatrick, an AGDC spokesman said on Tuesday. Discussions will begin on April 2 and last for most of the month. (3/29)
Ethanol shortage: Portland, Oregon, rack gasoline has jumped more than 33 cents since March 12 on ethanol shortages tied to the recent “bomb cyclone” in the US Midwest that set off flooding and interrupted rail movement of ethanol. (3/29)
Ethanol fast-track: After President Donald Trump promised Iowa voters he would unleash high-ethanol gasoline, his administration fast-tracked a plan to lift summertime restrictions on the fuel, forgoing studies of its potential price tag and hastily ending a review of the measure. (3/29)
US coal inventories in the power sector were at a 13-year low of 99.2 million st at the end of January, down from 102.79 million st after December and the lowest since stockpiles were at 98.19 million st after September 2005. The January total was down 34.3% from the five-year average. (3/28)
Cross-over energy suppliers: Ten years ago, you knew where you stood with your energy suppliers. Oil companies sold road fuel, while utilities supplied electricity and gas. Today, those old lines of demarcation are blurring. Utilities can fill up your car and oil companies want to keep your lights on. Technological progress and the threat of climate change are forcing both oil companies and utilities to rethink their strategies and are pushing them into each other’s territory. On Sunday Royal Dutch Shell, one of the world’s largest oil and gas companies announced that its First Utility retail power business would be rebranded as Shell Energy, with 700,000 households switched to renewable power. (3/26)
Methane from wind power: German utility Uniper has started producing methane gas derived from wind power and feeding it into gas pipeline networks at its Falkenhagen site as the country seeks wider uses for renewable energy. The step, part of the European energy project called STORE&GO, demonstrates that it is feasible to produce entirely green energy with qualities identical to natural gas. (3/27)
Solar deal: Kirkbi, the family holding company behind toy maker Lego, said on Friday it had agreed to buy a majority stake in Enerparc Inc., a US affiliate of German solar developer, Enerparc AG. (3/29)
Italy’s EV king? Enel, the Italian electricity group that by some measures holds the title of the world’s largest electric utility, last week highlighted the rapid growth in its network of electric car charging points. By the end of 2018 it had installed 49,000 worldwide – up 63 percent during the year. (3/26)
Electric aviation technology company magniX and Harbour Air, North America’s largest seaplane airline, announced a partnership to transform Harbour Air seaplanes into an all-electric commercial fleet powered by the magni500, a 560 kW (751 shp) all-electric motor that delivers 2,814 N·m of torque. Operating 12 routes between hubs such as Seattle and Vancouver and across the Pacific Northwest, Harbour Air transports more than 500,000 passengers on 30,000 commercial flights each year. (3/27)
Mandatory vehicle safety technologies: The European Parliament, Council and Commission (the EU institutions) reached a provisional political agreement on the revised General Safety Regulation. As of 2022 a suite of 15 new safety technologies will become mandatory in European vehicles to protect passengers, pedestrians and cyclists. The new mandatory safety features include: For cars, vans, trucks and buses: warning of driver drowsiness and distraction (e.g. smartphone use while driving); intelligent speed assistance (ISA); reversing safety with camera or sensors; and data recorder in case of an accident (“black box”). (3/28)
US Oil Exploration Drops by 95 Percent
By Philippe Gauthier, originally published by Resilience.org
May 3, 2019
It is well known that oil discoveries are in continuous decline worldwide in spite of ever-increasing investments. What is less known, however, is that spending on oil exploration is fast dropping in the United States. Exploratory drilling has been decreasing year after year and now stands at only five percent of its 1981 peak. In other words, once the currently producing shale oil wells are gone, there won’t be much to take their place.
According to figures derived from US Energy Information Agency (EIA) data by French oil geologist Jean Laherrère, oil exploration has already peaked twice in the United States. The first time was in the mid-1950s, with just over 16,000 wells drilled in a single year. The second major peak dates back to 1981, with 17,573 exploration wells. This number fell to only 847 in 2017.
Another even more revealing phenomenon is the decrease in NFWs. New field wildcats are exploration wells drilled in areas that have never produced oil, as opposed to wells drilled simply to help better delineate already known oil sectors (shown as red and greenlines in the graph). NFWs also declined by 95 percent, from 9,151 in 1981 to just 450 in 2017. According to Laherrère, this means that the United States have been almost entirely explored for oil and gas since 1859 and that few sites are worth drilling anymore. “There are only a few unexplored areas left offshore”, he notes.
In comparison, the number of operating wells (used to pump oil from previously known fields) was 646,626 in 1985, 597,281 in 2014, and 560,996 in 2017. However, nearly 400,000 of these wells are very old and produce at a marginal rate – fewer than 15 barrels a day and sometimes as little as one. They are described as marginal wells in the graph above.
It should be noted that the number of operating wells – a figure sometimes used to suggest that the oil industry is still running strong – does not account for this sharp decrease in exploration. Once shale oil production starts to decline – and Laherrère expects this to happen within a couple of years – there will remain few reserves to support US production.
Source: Jean Laherrère, Updated US primary energy in quad (April 30, 2019)
https://aspofrance.files.wordpress.com/2019/04/updateduspe2019-3.pdf
Replacing diesel tractors with horses or oxen – what will that be like?
http://energyskeptic.com/2019/replacing-diesel-tractors-with-horses-or-oxen-what-will-that-be-like/?fbclid=IwAR19QVUX5x_yXQktd71OM-OdGfqlm-2qCaTvhhNcZV9WCuS0KIkKJbr8QeA
I was just about to post this one. Posted segments and two charts!
"It shows that with no new investment, global oil production — including all unconventional sources — will drop by 50% by 2025 (Figure 1). That means that the global oil supply crunch is likely to happen already in the next five to six years and not in decades, as many fossil fuel companies hope. The global annual oil production is set to decline by approximately six million barrels per day starting in 2020. That means in the coming years the provision of energy related to oil will reduce annually by an amount equal to the total energy demand of Germany in 2014."
Figure 1: Oil production with no new investment from 2018 and demand in the New Policies and Sustainable Development scenarios. Source: World Energy Outlook 2018
Peak oil has been constantly underestimated by media, politics, and companies alike. Energy Watch Group was among the first to warn about it in 2008 in its study finding that the global oil supply is likely to dramatically decrease by 2020.
Instead of offering solutions in line with the Paris Climate Agreement, the IEA recommends “continued investment in oil and gas supply” in line with its policy, constantly overestimating the growth potential of fossil fuels (see the EWG analyses of the IEAs misleading scenarios on Energy Watch Group website).
New investments would be needed due to declining availability of oil at current price levels. But, the immense investments, undertaken since the early 2000s to find new oilfields, have been unsuccessful (Figure 2). On the contrary, the number of oil discoveries have fallen to a historic low.
Figure 2: Oil Finds at Lowest Since 1952. Source: Wood Mackenzie, Bloomberg.
By 2014, the oil industry started to roll back investments and rebought their own shares on a large scale. Ever since, the industry has been unwilling to scale up investments again.
The expected expansion of unconventional oil production in the USA will not be able to close the growing gap. Furthermore, within the last years, over six billion US dollars were divested from the fossil fuel energy industry. With an increasing number of investment funds, banks, countries, and companies divesting from fossil fuels, this number is expected to further grow within the next years.
Ghawar vs. Permian Basin: Is There Even a Comparison?
Trent Jacobs, JPT Digital Editor | 16 April 2019
Working on the rig floor in Texas where some see production starting to rival that of Saudi Arabia’s most prolific oil field. Source: Getty Images
https://www.spe.org/en/jpt/jpt-article-detail/?art=5377&fbclid=IwAR3zBrN9MHqEa45I491Tomd_65DNgoAGyByakNhCm7EqMKu9dvWQgqygmFU
THE COMING MIDDLE EAST OIL CRISIS: The Collapse Of Net Oil Exports
Posted by SRSrocco in Energy, News on April 11, 2019
https://srsroccoreport.com/middle-east-oil-time-bomb-collapse-of-net-oil-exports/?fbclid=IwAR0yl2sNZRCIBG1ZmYRxMLd4aCBKAjwESj_Jy6IEDxSUR-LZfi5pJCdpx6c
The Middle East is heading for a crisis in its oil industry. Unfortunately, the market doesn’t realize there is any danger on the horizon because it mainly focuses on how much oil the Middle East is producing rather than its exports. You see, it doesn’t really matter how much oil a country produces but rather the amount of its net oil exports.
A perfect example of this is Mexico. As I mentioned in a recent article, NEXT OIL DOMINO TO FALL? Mexico Becomes A Net Oil Importer, Mexico is now a net importer of oil for the first time in more than 50 years. Furthermore, the IEA – International Energy Agency, published in their newest OMR Report that Mexico is forecasted to lose another 170,000 barrels per day of oil production in 2019. Thus, this is terrible news for the United States southern neighbor as it will have to import even more oil to satisfy its domestic consumption.
Now, when we think of the Middle East, we are mostly concerned with its oil production. However, the Middle Eastern countries, just like Mexico, have been increasing their domestic consumption, quite considerably, over the past 40+ years. How much… well, let’s take a look. Since 2000, total Middle East domestic oil consumption jumped from 5.1 million barrels per day (mbd) to 9.3 mbd in 2017:
As we can see, while Middle East oil production increased by 7.9 mbd from 2000 to 2017, domestic consumption expanded by 4.2 mbd. This means that more than 50% of the Middle East’s production growth during this period was absorbed by domestic use. The next chart shows how the changes in the regions oil production and consumption impacted net oil exports.
So, after the Middle East spent hundreds of billions on capital expenditures to increase its oil production by nearly 8 mbd, its citizens consumed more than half of that amount. Thus, the increase in Middle East net oil exports since 2000 was only 3.7 mbd.
Now, if we look over a more extended period, the results are even worse. According to the data in BP’s 2018 Statistical Review, Middle East oil consumption surged to 9.3 mbd in 2017 from 1.3 mbd in 1975:
While the region’s domestic oil consumption increased by 8 mbd (1975-2017), total production increased by nearly 12 mbd:
The significant decline in Middle East oil production during the early 1980s was due to the significant cut in supply stemming from the global recession. World oil demand fell considerably from 1980 to 1984 while more oil supply came online. If we subtract Middle East consumption from production this is the following result:
Since 1975, Middle East net oil exports have only increased by 4 mbd. The huge drop in the Middle East net oil exports during the early 1980s was temporary, but domestic consumption continued to grow and will become more of a factor in the region as oil production peaks and declines. If we go back and look at the Middle East oil consumption chart above, we will notice that domestic oil demand was not impacted by the global recession in 2008-2010. Interestingly, overall Middle East oil consumption increased by 1 mbd from 2007 to 2010.
So, the real danger for the Middle East will occur when oil production peaks and declines while domestic consumption continues to increase. This will be a double-edged sword for the Middle Eastern Governments as they will be forced to cut public spending as oil revenues fall.
NEXT OIL DOMINO TO FALL? Mexico Becomes A Net Oil Importer
Posted by SRSrocco in Energy, News on March 27, 2019
https://srsroccoreport.com/next-oil-domino-to-fall-mexico-becomes-a-net-oil-importer/?fbclid=IwAR2dc_oOYhdO-Az74V2mislSVOsRVm1wV3d3u9612eLmwqNDGryKFTNc1VQ
While Mexico suffered the bloodiest year of violent deaths in 2018, even bigger trouble may be ahead for the embattled country. For the first time in more than 50 years, Mexico has become a net importer of oil. This is undoubtedly bad news for the Mexican Government as it has relied upon its oil revenues to fund a large percentage of its public spending.
And, the majority of these revenues came from just one prolific oil field. After the discovery of the huge Cantarell Oil Field in the Gulf of Mexico in 1976, Mexico’s oil production surged from 894,000 barrels per day to a peak of 3.8 million barrels per day (mbd) in 2004. That year, Mexico’s net oil exports exceeded 1.8 mbd.
Unfortunately, the downturn of Mexico’s oil production was also due to the peak and decline of the Cantarell Oil Field, which topped out at 2.1 mbd in 2004 and is now below 135,000 barrels per day:
With the rapid decline in Cantarell’s oil production, Mexico’s net oil exports also plummeted from 1.8 mbd in 2004 to only 314,000 barrels per day in 2017. However, the situation for Mexico’s net oil exports continued to deteriorate in 2018 as its domestic oil supply fell to a new low at the end of the year.
According to several sources, the BP 2018 Statistical Review, IEA’s OMR Reports, and the EIA’s data on World Oil Production, Mexico became a net oil importer in November 2018:
I find it strange that this has not yet been mentioned in the news as it is a very critical factor for the future of Mexico. Now, I would like to qualify that the data I am using is accurate. I found Mexico’s total petroleum production and consumption data from the EIA, the U.S. Energy Information Agency’s World Oil Production Browser, the IEA’s, the International Energy Agency OMR Reports, and BP’s 2018 Statistical Review.
In just a little more than a year, Mexico’s net oil exports fell from 314,000 barrels per day to net imports of 90,000 barrels per day in December 2018. This next chart shows Mexico’s total oil supply versus consumption for each month in 2018:
Of course, we don’t know if Mexico will be able to increase production, but if we consider the disaster that is taking place at PEMEX, the country’s national oil company, I highly doubt domestic oil production will recover. Why? Well, let’s just say, PEMEX is on the verge of bankruptcy as the company published two troubling signs in its Q4 2018 Financial Report:
Falling Oil Production
Rising Long-Term Debt
According to PEMEX’s Q4 2018 Report, oil production fell from 1.90 mbd Q4 2017 to 1.76 mbd in Q4 2018. These figures are for oil production only and do not include NGPL (natural gas plant liquids) and refining gains. Which is why it doesn’t add up to the 1.94 mbd for December 2018 shown in the chart above.
Regardless, oil production continues to decline at PEMEX while it’s long-term debt reached a new record high of $96 billion last year:
So, even with all the additional capital expenditures, (shown by the massive increase in long-term debt), PEMEX was not able to prevent the inevitable decline of its domestic oil production. What happens to PEMEX when oil production really starts to decline?
Sadly, as domestic oil supply continues to decline, the Mexican Government will have lower oil revenues to support its public spending. I believe Mexico is likely one of the next OIL DOMINOS to fall… and it won’t be pretty.
I will be doing a more detailed update on PEMEX’s financial information when they release their next quarterly report.
Remember Peak Oil? It's back!
Lloyd Alter
April 5, 2019
https://www.treehugger.com/fossil-fuels/remember-peak-oil-its-back.html?fbclid=IwAR2BpauYdzcwlPBW7yL0_hiB1bh1jixC_0MhFapBQbkVE1P2pu9dA7oV81o
It seems that the biggest Saudi field is losing its punch.
Years ago we used to talk a lot about peak oil, the prediction made by M. King Hubbert that the easy oil was going to run out, that it was going to get harder and harder to find the stuff, and it was going to get more and more expensive to get out of the ground. Hubbert wrote in 1948: "How soon the decline may set in is not possible to say, Nevertheless the higher the peak to which the production curve rises, the sooner and sharper will be the decline."
According to the predictions made back in 2005, right about now the Saudis are running out and we are smack in the middle of confusion, heading for chaos. Of course we are not, we are flooded with fossil fuels, thanks to the fracking boom.
But according to Eric Reguly, writing in the Globe and Mail, there is trouble ahead, because that prediction about Saudi oil may not be that far off. He writes that the giant Ghawar field used to produce ten percent of the world's oil, five million barrels a day.
In fact, Ghawar is not as resilient as we were led to believe. We just found out that its output has fallen substantially since Aramco previously came clean on its reserves and production. If Ghawar is losing momentum fast, peak oil – remember that theory? – might be closer than we had thought. And Ghawar is just one of dozens of enormous conventional-oil reservoirs scattered around the planet that are in various stages of decline.
Those include the North Sea, Alaska's Prudhoe Bay, and Reguly reminds us that Mexico's Cantarell reservoir used to supply 2.1 million barrels a day and is now down to 135,000.
Problems with the strategy of bunching wells close together mean some of the more optimistic projections for oil production from shale regions may have to be lowered. https://t.co/LC29gXA1yj
— The Wall Street Journal (@WSJ) March 4, 2019
The US Permian shale basin now supplies 4.1 million barrels a day, but fracked wells run out pretty quickly, and the fracking companies are all losing money. Better sell that pickup truck; it may well cost a lot more to fill it. As Reguly concludes, the Ghawar field is indeed in trouble,"and if it does collapse, peak oil will come a bit sooner."
The title of this board, Peak Oil - Epochal Event of Our Lives, purposely includes the word epochal, meaning without parallel.
Why will Peak Oil be without parallel?
Look at past events in the Middle East, which interrupted the supply of oil throughout the world and especially in the United States. These disruptions were geopolitical events and were ultimately resolved with diplomacy.
Peak Oil, on the other hand, will be a geological event, something that mankind has never faced before and certainly cannot control. It will inevitably occur when world oil production has reached its maximum capacity, as oil is a finite resource.
Illustrated below is Hubbert's Curve, which shows the growth, peak, and decline of worldwide, regional, and individual wells. This sequence continues to occur as world population dramatically increases and as Asia, in particular, accelerates its industrialization and its citizenry expands car ownership.
HUBBERT CURVE
Regional Vs Individual Wells
Peak Oil will adversely affect many aspects of our lives. For example, over the last 100 years, gas powered engines have contributed to the discovery and expansion of the automobile and airplane industries. Recently the population of the United States reached 300 million and vehicles now total 225 million. Future population growth, with a corresponding increase in vehicles, will further deplete oil supplies.
Agriculture has changed from numerous labor and animal-intensive family farms to a machine-intensive industry primarily controlled by corporations. Further, much of the increased productivity of farm soil emanates from petroleum-based fertilizers.
Transportation and agriculture are just two segments of society that must adjust to prospective oil declines. The critical question is how will our entire society adjust to a worldwide oil scarcity.
M. King Hubbert, a Shell geologist, predicted in 1956 that oil production in the United States would peak between 1965 to 1970. In hindsight, it did peak in 1970.
Mr. Hubbert's warning was given, yet it has been largely ignored. Oil discoveries and plentiful oil reserves in Alaska and the North Sea made many people complacent. In addition, new technologies were developed, so that oil was sucked up from the earth as if by giant straws. Although oil was abundant in the 1980's and 1990's, reserves in this century are in demonstrable decline.
China, in particular, recognizes the potential shortage of oil. It canvasses the world making oil deals to secure its energy future. It is also currently building 30 nuclear reactors and 7 hydroelectric dams to supplement its energy needs.
Sadly, the United States lingers behind. Its attitude seems to be that oil will always be abundant, probably because it has been in the past. Even with the dramatic crude oil price increases of the past three years, there still is a reluctance to confront this potential problem.
PURPOSE OF THIS BOARD
One purpose of this board is to provide I-Hub members with a repository of Peak Oil articles. Hopefully these will stimulate interest in the topic and I invite readers to post their thoughts.
Another important purpose of this board is to help people in preparing for or coping with the Peak Oil event. To this end, various links by category have been supplied below.
Good luck!
sumisu
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TABLE OF CONTENTS :
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GETTING READY FOR PEAK OIL & SUSTAINABLE LIVING
A companion #board-9881 titled "SUSTAINABLE LIVING FOR CHALLENGING TIMES" was spun off from this board to provide an archive of postings and sources of information which will aid individuals and communities to adopt and survive in a world of declining energy resources.
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PEAK OIL READING LIST FROM JIM PUPLAVA
http://www.financialsense.com/resources/peakoil.html
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PEAK OIL SITES, BLOGS, & ORGANIZATIONS
Peak Oil Clock http://sydneypeakoil.com/peak_oil_clock/
ASPO - USA http://www.aspo-usa.com/index.php?option=com_frontpage&Itemid=35
ASPO - INTERNATIONALhttp://www.peakoil.net
Beyond Oil, The View from Hubbert's Peak by Kenneth S. Deffeyes http://www.princeton.edu/hubbert/index.html
Dry Dipstick http://www.drydipstick.com
Energy Balance http://tinyurl.com/42awvh
Energy Bulletin http://www.energybulletin.net/
Energy Bulletin: Peak Oil Primer and Links http://www.energybulletin.net/primer.php
Energy Outlook http://energyoutlook.blogspot.com/
Global Public Media - Public Service Broadcasting For A Post Carbon World http://globalpublicmedia.com/
Life After the Oil Crash http://www.lifeaftertheoilcrash.net/
National Petroleum Council http://www.npc.org
NEI Nuclear Notes http://neinuclearnotes.blogspot.com/
Peak Oil Design http://peakoildesign.com/
Peak Oil News & Message Boards http://www.peakoil.com/
PLENTY http://www.plentymag.com/
Post Carbon Institute http://www.postcarbon.org/
Simmons & Company International http://www.simmonsco-intl.com/research.aspx?Type=msspeeches
The Coming Global Oil Crisis http://www.oilcrisis.com
The Oil Drum http://www.theoildrum.com/
The View From The Peak http://www.theviewfromthepeak.net
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NARRATIVE LINKS
Peak Oil FAQ #msg-33046927
Peak Oil Report by Peak Oil Associates International #msg-32147901
Evolutionary psychology and peak oil #msg-30634038
Roscoe Bartlett Discusses His Special Order Speeches #msg-29893771
OIL SHOCK AND ENERGY TRANSITION by Andrew McKillop, May 7, 2008 #msg-29196735
Energy Bull Market Fundamentals Remain Strong, Chris Puplava, 2008 http://tinyurl.com/5nze3h
The Truth About Oil by Vasko Kohlmayer, 05 08 08 http://tinyurl.com/3guotj
The Gospel According to Matthew, by Mimi Swartz, 02/01/08 #msg-26286577
Another Nail in the Coffin of the Case Against Peak Oil, Matt Simmons, Nov 2007
http://www.simmonsco-intl.com/files/Another%20Nail%20in%20the%20Coffin.pdf
Megaprojects update: Just how close to Peak Oil are we? 10/18/07 Chris Skrebowski: Trustee of the Oil Depletion Analysis Centre http://tinyurl.com/33rl3q
Crisis, what energy crisis? Euan Mearns, The Oil Drum: Europe. 07/03/07 Over 50 links to Oil Drum articles from the past year are provided which combined provide a comprehensive overview of the issues surrounding peak oil and energy decline. http://www.energybulletin.net/31608.html
On the Precipice: Energy Security & Economic Stability on the Edge - by Daniel Davis 07/17/07 http://www.aspo-usa.com/assets/documents/Danny_Davis_On_the_Precipice.pdf
Evolutionary psychology and peak oil: A Malthusian inspired "heads up" for humanity. by Dr. Michael E. Mills http://www.drmillslmu.com/peakoil.htm
Peak oil: Facts converge with theory http://tinyurl.com/2gtud4
11 incontrovertible truths of oil production & peak oil arguments by PeakEngineer, 05/23/07 #msg-19902674
Peak Oil, Carrying Capacity and Overshoot: Population, the Elephant in the Room, © Copyright 2007, Paul Chefurka http://www.paulchefurka.ca/Population.html
CRUDE OIL Uncertainty about Future Oil Supply Makes It Important to Develop a Strategy for Addressing a Peak and Decline in Oil Production, GAO Report, 03/29/07 http://www.gao.gov/new.items/d07283.pdf
DIE OFF - a population crash resource page http://www.dieoff.com/index.html
Portland, Oregon City Council unanimously creates a peak oil task force - 05/10/06 http://www.portlandpeakoil.org/
Testimony before the Australian Senate by Dr. Samsam Bakhtiari, a senior expert employed by the National Iranian Oil Company (NIOC), 07/11/06 http://www.aph.gov.au/hansard/senate/commttee/S9515.pdf
The Hirsch Report - February 2005 #msg-10310387
The Financial Sense Energy Resource Page http://www.financialsense.com/energy/main.htm
Financial Sense Big Picture Archive http://www.financialsense.com/fsn/2006.html
OIL: A TRAVELOGUE OF ADDICTION by Chicago Tribune, 07/29/06 (Suggested viewing: Open link and click on Watch documentary, left-hand column). http://tinyurl.com/h78ve
Exploring emotional reactions to peak oil by Kathy McMahon http://www.energybulletin.net/19718.html
Denial Of Energy Crisis Is A Conditioned Response, By Dave Wheelock #msg-25561271
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Hubbert peak theory From Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/Peak_oil
A Tribute To M. King Hubbert http://www.hubbertpeak.com/Hubbert/
Outlook for Fuel Reserves http://www.mkinghubbert.com/files/hubbert_1974.pdf
Nuclear Energy and the Fossil Fuels by M. King Hubbert, 1956 Published on 8 Mar 2006 by Energy Bulletin. Archived on 8 Mar 2006. http://www.energybulletin.net/13630.html
Shell Execs Briefed on Peak Oil in 1956
EXPONENTIAL GROWTH AS A TRANSIENT PHENOMENON IN HUMAN HISTORY
http://www.hubbertpeak.com/Hubbert/wwf1976/
Are we at the peak of oil production? #msg-39230370#msg-29389791
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ROBERT L. HIRSCH
The Hirsch Report - February 2005 #msg-10310387
Robert L. Hirsch from Wikipedia - http://en.wikipedia.org/wiki/Robert_L._Hirsch
Robert Hirsch - Peak Oil Video - #msg-33832912
FSN: Energy Roundtable: Jim Puplava, Matthew Simmons, Robert L. Hirsch, & Jeffrey G. Rubin Discussion - 02/02/08 http://www.financialsense.com/Experts/roundtable/2008/0202.html
Dr. Robert Hirsch: "We Are Staring Directly Into An Energy Storm in The Next 2-3 Years"
#msg-69993495
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Simmons & Company web site
http://www.simmonsco-intl.com/research.aspx?Type=msspeeches
Book Review: Twilight in the Desert - The Coming Saudi Oil Shock and the World Economy by Matthew R. Simmons
Read more: http://blogcritics.org/books/article/book-review-twilight-in-the-desert/#ixzz0nXMuOsbg
Peak Oil Solution: The Simmons Plan
http://blogs.forbes.com/energysource/2010/02/10/peak-oil-solution-the-simmons-plan/
Presentation at 2006 Boston World Oil Conference, 10/26/2006
http://video.google.com/videoplay?docid=-429585738009344102#
President Carter's Address to the Nation On Energy Policy (April 18, 1977) Video: http://www.youtube.com/watch?v=4Y6pPF_lzsU
Transcript: http://www.pbs.org/wgbh/amex/carter/filmmore/ps_energy.html
Energy Policy and Conservation Executive Order 12003, July 20th, 1977
http://www.presidency.ucsb.edu/ws/index.php?pid=7842
Carter's Brave Vision on Energy by David Morris, Monday, October 10, 2005 by the Minneapolis Star Tribune
http://www.commondreams.org/views05/1010-27.htm
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Congressman Bartlett is leading efforts to change U.S. energy policy to address the challenges of peak oil. U.S. oil production peaked in 1970 and is in permanent decline. World oil production will also peak - perhaps disastrously soon. http://bartlett.house.gov
Congressman Roscoe Bartlett video on Peak Oil in 7 parts. . .
The House of Representatives formed a Peak Oil caucus in 2005 with 8 members: #msg-30864250
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NATIONAL GEOGRAPHIC ON PEAK OIL
"Tapped Out" by Paul Roberts, August 2008 http://ngm.nationalgeographic.com/2008/06/world-oil/roberts-text
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AUDIOS & VIDEOSPeak Oil - Chris Martenson http://www.chrismartenson.com/peak_oil
Twilight In the Desert http://www.youtube.com/watch?v=QfEO3PCEeis
Peak Oil - Robert Hirsch http://www.youtube.com/watch?v=qSbfvZiJ9g0
Peak Oil - Crude Impact #msg-30619202
CNN Special Investigation - OUT OF GAS #msg-30188572
91 86 90 - Peak Oil Number-Crunching http://www.youtube.com/watch?v=oC-koGwRu_A
Oil and the 'New International Energy Order' - Michael Klare, 04 14 08 http://tinyurl.com/59947u
"A conversation with John Hofmeister" - Charlie Rose, 03 25 08 http://tinyurl.com/23o8py
Video: A High-Risk Barrel, September 28, 2007 http://novakeo.com/?p=1054&jal_no_js=true&poll_id=10
Matt Savinar - Coast to Coast, 10/07 http://klrietmann.bingodisk.com/bingo/public/Savinarc2c111.mp3
A Crude Awakening http://tinyurl.com/yp88uu
Matthew Simmons on Peak Oil, ASPO Conference at Boston University 10 27 06 http://video.google.com/videoplay?docid=-429585738009344102&q=peak+oil'
Dr. Kenneth Deffeyes on Peak Oil, 2005 Energy Conference - http://video.google.com/videoplay?docid=2992397199507996758&hl=en
Peak Oil, Richard Heinberg, 09/11/06 http://video.google.com/videoplay?docid=-2141508903056009420
Peak Oil: Fireside Chat with Julian Darley - http://video.google.com/videosearch?hl=en&q=julian%20darley%2C%20boston%20world%20oil%20conference&um=1&ie=UTF-8&sa=N&tab=wv#q=julian+darley&hl=en&emb=0
Peak Oil & The Party's Over http://www.youtube.com/watch?v=0Xl3J4Kpy88&feature=PlayList&p=F39AC0DCDA7ADEC2&index=0&playnext=1
Peak Oil: Gas Prices, Supply Depletion & Energy Crisis: From NewCulture.org, 07 27 06 http://www.youtube.com/watch?v=DMQd5nGEkr4&mode=related&search
The Long Emergency: Surviving Catastophies of the 21st Century, 10 30 05 http://tinyurl.com/2g6p35
Real Oil Crisis - 11 24 05 (Video Presentation) http://www.abc.net.au/catalyst/stories/s1515141.htm
The Geopolitical Consequences of Peak Oil: Michael Klare, 10 27 06 http://video.google.com/videoplay?docid=-3121561902567229690&hl=en
The End of Suburbia http://www.youtube.com/watch?v=Q3uvzcY2Xug&feature=related
World Made By Hand (Video Promo) http://www.youtube.com/watch?v=PbEe8v4YpgA
T. Boone Pickens on CNBC [discusses alternative energies] http://www.youtube.com/watch?v=ylI4iQ-5iXg
Dr. Al Husseini, retired head of exploration and production for Saudi Aramco, interview with CNBC on 03/27/08: http://www.cnbc.com/id/15840232?video=697807590&play=1
RICHARD HEINBERG on OUR POST-CARBON FUTURE http://tinyurl.com/636juw
Megan Quinn Bachman - Peak Oil, Community & The Future in four parts:
Calm Before the Storm, Richard Heinberg http://www.youtube.com/watch?v=ajqgOCxGEAo
Running on Empty: Life Without Cheap Oil http://www.youtube.com/watch?v=Jqg3P3wOV60
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A 10% Reduction in America's Oil Use in Ten to Twelve Years An Overlooked, Practical, and Affordable Approach Using Mature Existing Technology by Alan S. Drake, May 2006 • Rev. October 2006 http://www.lightrailnow.org/features/f_lrt_2006-05a.htm
Electrification of transportation as a response to peaking of world oil production by Alan S. Drake 12/19/05 in Light Rail Now http://www.energybulletin.net/14492.html
Public Transport Industry Issues http://www.lightrailnow.org/industry_issues.htm#electrification
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COMMUNITY SOLUTIONS & NEW URBANISM
The Community Solution http://www.communitysolution.org/
WORLD CHANGING http://www.worldchanging.com/about/
How to Wean a Town Off Fossil Fuels http://www.worldchanging.com/archives/005135.html
A Community Solution to Peak Oil: An interview with Megan Quinn http://www.energybulletin.net/5721
Sustain Lane | The Healthy, Sustainable Living Community Resource http://www.sustainlane.com/
Culture Change http://culturechange.org/cms/index.php
Communities, Refuges, and Refuge-Communities by Zachary Nowak http://www.energybulletin.net/21172.html
Karavans - Moving Toward a New World of Self-Sufficiency, Sustainability, and Genuine Community http://www.karavans.com/peakoil.html
New Urbanism http://www.newurbanism.org/
The New Urbanisn http://www.newurbannews.com/AboutNewUrbanism.html
Online NewsHour - New Urbanism http://www.pbs.org/newshour/newurbanism/
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OTHER NATIONS - STATUS FOR PEAK OIL
Closing the 'Collapse Gap': The USSR was better prepared for peak oil than the US - by Dmitry Orlov, 12/04/06
http://www.energybulletin.net/node/23259
The power of community: How Cuba survived peak oil - by Megan Quinn, 02/25/06 http://www.energybulletin.net/13171.html
"Flush With Energy" By THOMAS L. FRIEDMAN August 10, 2008 #msg-31394853
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FSN: Lutz Kleveman, 01/24/04 - "The New Great Game: Blood and Oil in Central Asia"
http://www.financialsense.com/Experts/2004/Kleveman.html
FSN: Michael T. Klare, 01/15/05 - "Blood and Oil" http://www.financialsense.com/Experts/2005/Klare.html
FSN: Michael T. Klare, 6/21/08. "Rising Powers, Shrinking Planet: The New Geopolitics of Energy" http://www.financialsense.com/Experts/2008/Klare.html
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CANTARELL OIL FIELD & DEPLETION
Cantarell Field by Wikipedia
http://en.wikipedia.org/wiki/Cantarell_Field
Cantarell, The Second Largest Oil Field Is Dying, by G.R. Morton, 08 14 04
http://www.energybulletin.net/node/1651
Cantarell Decline Perspective, Jim KIngsdale's "Energy Investment STRATEGIES" 07 08 08
http://www.energyinvestmentstrategies.com/2008/07/08/cantarell-decline-perspective/
A Storm Called Cantarell by Sean Brodrick, "Money and Markets' 09 03 08
#msg-31902352
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Export Land Medel by Wikipedia
http://en.wikipedia.org/wiki/Export_Land_Model
What the Export Land Model Means for Energy Prices By: Doug Casey, Casey Research LLC, 06 04 08 http://www.321energy.com/editorials/casey/casey060508.html
An Update on Mexico Export Land Model by GraphOilogy 01 22 08
http://graphoilogy.blogspot.com/2008/01/update-on-mexico-export-land-model.html
Oil Outlook: "Export Land Model" by Jeff Rubin on CNBC, October 2007
http://www.youtube.com/watch?v=9Ed9jsKAOHU
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CHARTS AND ILLUSTRATIONS OF INTEREST
A significant example of collapsing oil production is Cantarell, recently the largest oil field in the Western Hemisphere. From over 2 million barrels per day in 2004-2005, Cantarell is now producing at around 700,000 barrels per day. [credit chart to energycrisis.com]
The amount of oil you can produce can only ever equal the amount of recoverable oil you discover. The area under both curves must eventually be equal. [ http://futureproofkilkenny.org/?page_id=110 ]
[source: http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp
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